On Election Day, Washington voters will choose between Initiative 330, the medical establishment’s plan for reforming malpractice law, and Initiative 336, the plan of the state’s trial attorneys. We can also choose to say no to both, and hope that the Legislature will develop the gumption to tackle this difficult issue in a balanced and deliberative way. But for the moment, all we have before us are these two special-interest initiatives. I’ve written before about some of the economic problems with I-336, so this column is devoted to I-330.
The doctors say that the purpose of Initiative 330 is to hold down the cost of malpractice insurance premiums. Lower premiums mean lower medical costs and fewer doctors abandoning their practices.
A good malpractice system compensates injured patients fairly and gives doctors and hospitals a financial incentive to police themselves. Part of the way the current system does this is with the threat of large court judgments to punish the medical system when it screws up. The current system doesn’t work very well, but parts of I-330 will eliminate what safeguards we have without replacing them with anything better.
How will I-330 change the incentives of insurance companies and lawyers?
One provision of I-330 allows your doctor to ask you to agree in advance to arbitration, signing away your rights to sue if anything goes wrong. Arbitration is sometimes a good system, primarily because it reduces legal costs while still putting a case before a neutral party. An added advantage is that arbitrators are less likely to be carried away by emotion than are juries. Contracts between large companies frequently specify arbitration because both sides think that arbitration is an efficient way to settle disputes.
The words of I-330 don’t make arbitration mandatory, and your doctor may be perfectly willing to treat you whether you agree to arbitration or not. But what do you think the insurance companies are going to do?
The insurance companies are going to tell the doctors: No arbitration, no insurance. It won’t matter what you and your doctor think is fair.
The problem with I-330 is that arbitration is going to be involuntary in practice, even if it’s voluntary in principle. You’re going to be told to either agree to arbitration or to find a new doctor – probably a doctor in Oregon or Idaho.
Another provision of I-330 limits the fees lawyers can collect in big cases. Fees in moderate size cases aren’t much affected, but lawyers will be limited to $15,000 in fees for each $100,000 won above $600,000. Fifteen thousand dollars isn’t chicken feed, but it’s equal to something like a week or two’s worth of work from a high-powered firm.
Once in a while, we want hospitals and doctors to get socked with heavy penalties, because it’s the only way to make sure they pay attention. The way the system works now, if medical personnel inject a patient with cleaning fluid, or if a hospital hides the fact that a doctor is addicted to drugs, there’ll be a lawyer willing to take the responsible party to court and hold them to account. Under I-330, far fewer lawyers are going to be willing to pursue expensive, big-time malpractice cases.
The current system of using courts and malpractice attorneys to police the medical system isn’t very good. It’s expensive, and indirectly, all of us pay for it. The courts are far from an ideal place to tag the occasional incompetent doctor or irresponsible hospital. But it’s all we’ve got. Let’s not throw out the system we have until the Legislature does its job and comes up with a better one.
When it comes to I-330, listen to your lawyer (and your economist) and vote no.
Dick Startz is Castor Professor of Economics at the University of Washington. He can be reached at econcol@u.washington.edu.
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