A judge in a monopoly public court system faces no financial incentives to be fair and judicious in his rulings. No economic force directs him to rulings whose rewards are commensurate to damages. FULL ARTICLE by Eric M. Staib
Source link: http://blog.mises.org/10830/malpractice-on-the-market/
Malpractice on the Market
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How would a private arbitration system work? Is there basically a pre-procedure contract between doctor and patient, specifying both what happens in the event of malpractice and which private arbiter to use in the event this occurs?
Mike you are partially correct. The simplest way is to have both sides select an arbitrator then these arbitrators select a third who both parties agree will have binding authority. Then if there is damage to the paitent then the two sides will argue with their arbitrators. If they can not come to an agreement then they will seek the services of the third whose decision is binding.
The real damage here is that the initial parties: patient and doctor can not make a contract to reduce the price by for example allowing only the doctors arbitrator to have binding authority.
For instance I would certainly consider using my doctors arbitrator as there is little chance of malpractice from a family doctor and I could look at the statistics of this arbitrators work. Similarly, I would be much more careful when confronted with surgery.
As for emergency surgeries and the like, the person could name their insurance company or other third party as their agent to represent them in this situation. The hospital would look on the web for their agent and when they find them they could decide how to proceed at that point. That is easier than finding a next of kin.
“…dynamic competition will lead to a more efficient allocation of risk burden and make healthcare more accessible and valuable…”
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Overlooked is the fact medical doctors operate within a strict government monopoly… and are direct agents of the government, as state-licensed practitioners in a heavily restricted & regulated medical economic system.
The current malpractice system is not
preventing “dynamic competition”.
However, from an objective judicial standpoint, the government ‘should’ bear most of the malpractice legal-risk rather than individual doctors — because the government dictates who may be a doctor, and how doctors may deliver medical services to consumers.
Ultimate solution, of course, is to get the government entirely out of the medical system… permitting a free market in those services.
Would that judges decided these things–most judges are at least educated enough to realize that verdicts are paid by consumers.
Liability insurance premiums are high because lawsuit outcomes are completely unpredictable: nobody knows what a jury will do. The average urban jury is mostly tax eaters who think professionals and businesses just print their own money when they need it. A sensible judicial system would control this “A spending B’s money on C” dynamic by capping pain and suffering awards.
This is a brilliant article!
Byzantine,
I agree. Too many Jury’s (it’s not judges who routinely award damages) want to ‘stick it’ to the doctor and/or already know it’s the ‘big bad insurance’ company who’s actually going to pay the claim. Our system isn’t the best but it’s not the worst either. I would hate to have the gov’t set the financial penalties for malpractice.
Irregardless of the system as it exists:
I have long considered that malpractice insurance is too much of a one-sided affair.
How about the patient’s burden of responsibility?
If one is concerned about the possibility of malpractice, why not have patient-paid policies that cover their own preferred risk exposure?
This does not suggest that medical providers ought to be exempted from malpractice liability, only that patients who desire a high return on potential malpractice accidents may opt for additional coverage.
The equipment industry, auto industry, and others offer these kinds of premium warranty and service policies for those customers who have concerns. Many retailers offer policy options at the time of purchase and require either the purchase of a policy or a signed waiver.
The intent of a signed waiver in lieu of a policy is and indication of the purchaser’s committment to his own future satisfaction.
You might want to do a little more background on this. When I Googled “Arbitration firms”, a pretty devistating picture of that industry emerged.
Here is just one article describing some findings.
What a wonderful source to go along with your previous support of the rebellion by those who don’t wish to pay their credit card debt, Ackerman. A frightening world indeed where people would be expected to be adults and live by the terms of contracts they signed when they borrowed money.
Very nice article. I have signed leases and other contracts where the specifics of binding arbitration are spelled out if a dispute arises. If a physician attempts to enter into a similar agreement mandating either binding arbitration or a limitation of future awards, that agreement will be thrown out by the court.
The long and short of it is that the trial bar (who happen to control all the state legislatures) will not allow a lucrative racket like malpractice litigation to be taken away.
From “Denten”
“However, from an objective judicial standpoint, the government ‘should’ bear most of the malpractice legal-risk rather than individual doctors — because the government dictates who may be a doctor, and how doctors may deliver medical services to consumers.”
I would agree IF “government” bearing risk costs meant that politicians themselves were bearing the costs.
However, as we know all too well, politicians have a reliable tendency to accept benefits and dish out costs. “Government” bearing costs means taxpayers bearing costs.
Also, I had to omit the point about cartelized doctors, just as I had to omit points about third-party payment and regulation of procedures and medication. It’s a daily after all, not a treatise.
“”Binding mandatory arbitration is a systematic, privately funded denial of justice for consumers,” said Laura MacCleery, director of Public Citizen’s Congress Watch division. “It is a get-out-of-jail-free card for corporate hucksters.” ”
Should I laugh now or later?
You begin the article by stating that the judge in the monopoly court has no financial incentive. I always thought that courts/judges are not supposed to have any type of incentive to come to a judgement.
Each judgement is only supposed to be based on the judges interpretation of the facts according to law. Mistakes are then subject to correction by the appelate courts.
Kelvin Scoon:
Ad hoc incentives-think ruining teenagers’ lives to look “tough on crime”-to judge IN FAVOR OF one side are perverse. (Don’t mean to yell, but there are no italics.)
Alternatively, reputation matters on the market, establishing an incentive to rule in a fair manner.
What monopoly courts ensure is the first: rulings favorable to the political class. It’s just another manifestation of politics pleasing the lynch mob. The media and politicians tell us to hate insurance companies, so it’s no surprise when juries or judges smash a doctor’s reputation with a crushing decision.
One additional point is the cost of a malpractice suit for the patient. In most European countries I know, if you file a suit for malpractice and loose, you are stuck not only with the cost for your lawyer, but also for the lawyer of the doctor and with the cost of the court itself. So loosing such a case poses a high financial barrier to filing a lawsuit. Therefore most patients first try to find a solution out of court by private arbitration e.g. the doctors association that usually do a rather fair evaluation although they were paid by the doctors. If you can find a solution this way, it already might lower your costs medical liability substantially (especially if the cost of the doctors lawyer depend on how much you sue him for – as it is in germany or switzerland)
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