Current medical malpractice law in California stands to be amended by Proposition 46. According to state law, patients can sue health care providers for violating ‘standards of care.’
Unfortunately, estimating the fiscal impact is difficult because there are many uncertainties as to how Prop. 46 would interact with the current health care system.
The Legislative Analyst Office (LAO) estimates that each component of the proposition — medical malpractice, prescription drug reform, and drug testing of doctors — are likely to contribute to a total cost of tens of millions to hundreds of millions of dollars for state and local governments annually.
The LAO writes, “higher direct medical malpractice costs—are generally passed along to purchasers of health care services.” These “purchasers of health care services” not only includes the government, but also consumers and health care providers.
A Yes vote on Prop. 46 means:
- The cap on medical negligence lawsuits for pain and suffering would be raised from $250,000 to $1.1 million and annually adjusted for inflation.
- Hospitals would also be required to drug test doctors for alcohol and drugs.
- Health care workers would be required to review the state’s database of prescription drugs prior to prescribing a controlled substance to a patient.
A No vote on Prop. 46 means:
- The cap on medical negligence lawsuits would remain at $250,000 and not be adjusted annually for inflation.
- Hospitals would not be required to perform drug tests on doctors
- Health care workers would not be required to consult the state’s database of prescription drugs prior to prescribing a controlled substance to a patient.
There are three main components to Prop. 46: medical malpractice, prescription drug abuse, and physician drug testing.
Prop. 46 would raise the cap on pain and suffering medical malpractice claims from the current $250,000 to $1.1 million, adjusted annually for inflation. The current cap was put in place in 1975 to prevent medical malpractice lawsuit costs from ballooning out of control while simultaneously limiting the fees that trail lawyers can collect from these lawsuits by setting limits on their cut of the damages.
According to the LAO, raising the cap on medical malpractice lawsuits would likely increase state and local government health care spending both because greater damages would be awarded and it could possibly change the amount and types of health care services provided.
For example, because doctors will have an increased financial liability, they may perform additional tests or procedures they may otherwise not have ordered. These cautionary steps may save money by preventing future illness, but they could merely increase total spending.
All of these increased costs have to fall on someone, and the LAO estimates the costs will be relegated to purchasers of health care services, including governments, businesses, and consumers through increased spending, increased rates, and increased costs of doing business.
Prescription Drug Abuse
Estimating the fiscal impact is difficult because there are many uncertainties as to how Prop. 46 would interact with the current health care system.
Starting in 2016, all health care providers will be required to register in the state’s prescription drug monitoring program, but Prop. 46 would take it one step further by requiring health care providers to consult a patient’s history to help prevent prescription drug abuse.
This component of Prop. 46 appears to be the least costly, and LAO projects lower costs for prescription drugs and lower costs for government spending on prescription drug abuse related services such as law enforcement and social services.
Prop. 46 requires the random drug and alcohol testing of physicians and surgeons as well as testing within 24 hours after a medical error or violation of the standard of care. Physicians are also required to report suspected abuse of their colleagues, in which case a drug or alcohol test would be performed.
The drug and alcohol testing of doctors could potentially save health care providers and governments money by helping to preventing medical malpractice and decreasing costs associated with medical errors. However, hospitals would bill the doctors for the costs of the tests and these costs would likely be passed on to state and local governments as well as individuals because of the higher costs for services.
LAO reports that “administrative costs would likely be less than a million dollars annually, to be paid for by a fee assessed on physicians.”
Public Opinion on Proposition 46
In a USC and LA Times poll, voters have varying levels of support for the different components of Prop. 46. While a majority of voters favor the drug testing of doctors (68%), less than half of voters approve of raising the cap on medical malpractice damages (42%).
Overall, support for Prop. 46 is dropping among voters who learn of the potential increased costs to the state and local governments. (No poll was conducted to measure support of reviewing a database of prescription drugs.)
Proponents of Prop. 46 include groups like Consumer Watchdog, Consumer Attorneys of California, and the Consumer Federation of California. They argue the proposition helps prevent substance abuse and makes physicians culpable for their actions. Backers support cracking down on prescription drug abuse, thereby lessening the amount of prescriptions and decreasing costs for legitimate prescriptions.
Opponents of Prop. 46 — predominantly health and health-care related organizations — argue trial lawyers wrote the proposition in an effort to cull more money from medical malpractice lawsuits. The opposition includes the ACLU, the California Hospital Association, and the California Teachers Association, along with more than 100 organizations.
Critics argue increases in medical liability insurance will drive talented doctors out of California to go practice in a state with more affordable insurance.