CBO: Malpractice reform would result in billions in savings over next decade

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Deficit-reduction plan to gain $600 billion from lower provider payments and higher beneficiary prem
Deficit-reduction plan to gain $600 billion from lower provider payments and higher beneficiary prem

The government could save as much as $54 billion over 10 years by enacting medical malpractice reforms, according to a recently released analysis from the Congressional Budget Office.

The revenue would come from two different areas, according to Friday's report. By reducing the amount of money Medicare, Medicaid and other programs would be forced to spend on lawsuits, the government would save around $41 billion over 10 years, the CBO estimates. Also, workers would spend less money on malpractice insurance and other malpractice-related expenses. This would increase the amount of taxable income, bringing in an additional $13 billion in income tax over the same time period. Nursing homes are a frequent target for medical malpractice and wrongful death lawsuits.

The analysis was based on proposed damage caps of $250,000 for non-economic damages, $500,000 for punitive damages and a more stringent statute of limitations on claims. Comprehensive malpractice reform has not appeared in healthcare reform legislation, but President Obama has allocated $25 million for pilot programs geared toward reducing malpractice costs.