It’s happened again. Bryanna Baker, then 24-years old, became a cardiac cripple in need of a heart transplant because her heart attack was misdiagnosed. This week a Las Vegas jury awarded her $9 million, but because of a legislative cap on medical malpractice damages in New Mexico, she will receive $200,000 from each of three physicians held liable. She will also receive an additional $1.2 million from a state compensation fund. And, all Bryanna’s additional future medical bills will allegedly be paid from this fund, which is financed by a tax on all health-care providers.
New Mexico has an especially onerous cap on damages to the victims of medical malpractice. First enacted 30 years ago, the capped amounts have been raised only once, in 1992. The liable doctor has to pay the first $200,000 of the damage he caused and then the state’s patient compensation fund pays an additional $400,000. If future medical bills exceed the cap, the fund pays the bills directly. In other words, regardless that the jury decided the damages were $9 million, Bryanna will receive $600,000 from the doctors’ insurers and $1.2 million from the state fund now, and the compensation fund will allegedly pay future medical bills if the $1.8 million runs out. Does anyone think that the state compensation fund will pay any medical expense that Bryanna asks for? Think again.
Consider the moral hazard that the New Mexico damage caps create. A hospital administrator has little economic incentive to make patient safety the priority that the patients or the doctors want. Why replace old technology that is still functional? Why hire enough nurses when the existing ones can be slave driven or replaced with cheaper employees with less technical training? Why hire top-notch radiologists when someone in India can read x-rays remotely for a lot less?
I really get a laugh when people think that we have a free market in medical care in America. What we have is a corporatist system that is heavily regulated by state and federal government. Every so-called market failure of our health-care system is directly traceable to a poisonous relationship between government and government-friendly businesses. The only solution to the health care inequities in America — and the only solution not currently under discussion — is to remove government from the mix entirely and let businesses, including insurance companies, bear the full brunt of the competitive free market.
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