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It's Not a Dessert

President Bush is trying to push his “tort reform” scam. This is something the insurance companies have wanted for a long time. It seems like every year they complain that “frivolous” lawsuits are going to put them out of business, yet every year they make record profits - a 1,000% increase last year alone.

Senate Minority Leader Harry Reid has a the right idea (on this issue, anyhow),

Phil Singer, a spokesman for Nevada Democratic Sen. Harry Reid, the new minority leader in the Senate, said if Congress wants to control rising malpractice insurance premiums, "then we must enact tough insurance reforms to promote real competition in the insurance industry."

Damned straight. Insurance companies are about the only businesses exempt from anti-trust laws and they regularly collude to keep premiums high.

A few years ago, California passed legislation that chipped away at their monopoly status, and premium prices immediately fell 20% because they were finally subjected to market pressures and competition. As far as I can tell, none of the major players went out of business because of it, though their profits may have only increased by 800% instead of 1,000%. Boo hoo.

The bill currently under consideration also shields Merck and Pfizer (Vioxx and Celebrex) who were/are selling products they knew would kill off some of their clients. If it passes, they won't have to factor in "hush money" for each new drug anymore. In fact, they could cut back substantially on safety testing too. That's great news for CEOs unhappy with the paltry 10%-20% profits they've been making.

If the goal of tort reform is to lower healthcare costs, there are much more effective measures that can be taken. Break the insurance company collusion practices that keep premiums artificially high. Encourage healthcare providers to modernize their record keeping and billing procedures to bring transaction costs down from current highs of $25 per transaction. Make every physician's malpractice records public, so we can choose doctors who aren't serial screw-ups - five percent of all doctors are responsible for more than half of all malpractice payouts.

Just like President Bush's prescription drug fiasco, this bill is a giveaway to insurance and pharmaceutical industry campaign donors, and won't do a damned thing to bring down healthcare costs. Write your Congresspersons and tell 'em what you think of it.

Posted by American Pundit at January 6, 2005 4:21 AM