While President Obama appealed to conventional wisdom – malpractice claims drive up costs by encouraging "defensive medicine" – when he supported tort reform recently, BusinessWeek
reports that "The evidence suggests a much smaller effect. Study after study shows that costs associated with malpractice lawsuits make up 1% to 2% of the nation's $2.5 trillion annual health-care bill and that tort reform would barely make a dent in the total."
Though one hospital official said as much as 5 percent of their costs are attributable to malpractice premiums and awards, the Congressional Budget Office finds the number to be closer to 2 percent and noted, "So-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians." The affect on cost of tort reforms in more than 30 states could provide at most a 2.3 percent decrease in costs if applied nationwide, a separate recent study found (Arnst, 9/16).