Conditionally Contingent Health Care Reform

If you believe Michael Moore, health care in the UK and in France is absolutely perfect and those countries have none of the problems we have here. The United States is third world in comparison. The documentary, though, was a very narrow sliver of reality. A single payer health care system isn’t the end of the world but you must not sweep its drawbacks and problems under a rug. Many on the left say the right is trying to scare the public with words like rationing and waitlists. Under a single payer system, the price of consuming health care is essentially nonexistent. What if a movie theatre was purchased by the government and did not charge for tickets? The theatre would be full every night. People who could not previously afford to go, but wanted to, would now be able to. In addition, people who did not necessarily need to go would start going because it is free. This is exactly what happens with a single payer system. The demand for health care drastically increases whether you really needed it or not. I would like to see those who cannot afford health care have a real option to get the care that they need. I reject, though, Michael Moore’s and the left’s premise that health care is a human right. We have a constrained supply of doctors. They can only treat a finite number of patients and problems. If there are no doctors there is no health care. I do not have to depend on anyone else for my unalienable rights of life, liberty, and the pursuit of happiness. Health care for the poor is a social responsibility that should be debated in the public square. So let’s debate what is not being talked about.

The UK, France, and Canada all have socialized medicine. The idea is that if you cut out the administration costs, the total cost of health care will go down under this system. It is true that we need to focus on cutting out non value added paperwork and administration to cut costs. A single payer system seems like amputating an arm to cure an itchy mosquito bite. In the US, malpractice insurance is paid directly and indirectly by doctors. They must pay enormous premiums to protect themselves from lawsuits. In addition, every piece of equipment they buy from health care companies comes with the price of insurance built in to protect the manufacturer. The UK, France, and Canada do not have to pay these enormous costs. Why? Are their doctors just less prone to making mistakes? No. In those countries, the legal system is not a lottery.

Have you ever heard of contingency fees? Under our legal system, a lawyer can sign a contract with a client where pay is contingent on the outcome. If the lawyer loses the case, the client does not pay. However, if the lawyer wins, the client would need to pay 5, 10, 15% of the damages award (based on what the contract stated). For lawyers and clients, the legal system acts just like a lottery. Lets compare this to “Conditional” fees. In the UK, lawyers may write contracts which are also conditional on the outcome. However, their pay is a predefined fee or rate. They are not allowed a percentage of the outcome. They can though agree to a risk fee with the client (up to 100% of the fee). This risk fee is added on to the total fee and represents the risk to the lawyer of losing the case and not getting paid.

Take the example of a lawyer in the UK and one in the US. They sign conditional and contingent fees respectively with their clients. Both lawyers rack up $100,000 in fees and both win the cases with their clients being awarded $10,000,000. The UK lawyer had a risk fee of 100% and the US lawyer had a contingency fee of 10%. The US lawyer would earn $1,000,000 while the UK lawyer would only earn $200,000. This looks like all we have done is shaft the lawyer and make the lottery even greater for plaintiffs in the UK but there is one more trick up the sleeve of the UK (and other) legal systems. Loser pays.

If both lawyers had lost their cases the US and UK lawyers would not be paid. However, the client in the US is no worse off than they started. The plaintiff in the UK is not so lucky. They are financially responsible for paying the defendant’s legal costs. The message is: if you bring a frivolous lawsuit and lose, there will be consequences. In the US, it is often cheaper for insurance companies to settle cases out of court because win OR lose their legal fees might be just as high as the settlement costs. Rudy Giuliani once said the defendants of these cases lose even if they win and he is exactly right.

In all the debate we are hearing, the left wants a health care system like the UK, France, and Canada. Sadly though, there is no mention of tort reform to match what is in the UK, France, and Canada. Is it any coincidence that trial lawyers are the biggest donors to the Democrat party?

The cost of all of this weighs heavily on the costs of healthcare. If we truly want to control skyrocketing health care costs, these are simple reforms we could make. It would not involve new government programs and it would not cost the taxpayers any money. Trial lawyers and plaintiffs would be much more careful about the malpractice suits they bring and the cost of our healthcare would fall dramatically. That is a conservative solution for America.