Goodman on a Choice Med Mal System

In Forbes, John Goodman, Senior Fellow at the Independent Institute, discusses the well-known shortcomings of the tort system for medical malpractice.  He then proposes an alternative:

Prior to undergoing treatment, patients would be offered voluntary, no-fault insurance as an alternative to the tort system. The base patient compensation would be set by an independent commission and would be paid irrespective of the cause of the adverse event. The rates would be similar to the schedule of payments under workers’ compensation and patients would be free to pay additional premiums out of their own pockets for more generous coverage. Base compensation would be paid by insurers from premium payments by hospitals and physicians—just as they buy malpractice insurance today. The premiums would reflect the individual provider’s (or institution’s) success or failure at reducing adverse events.

Insurance companies, rather than patients and third-party payers, would become the monitors of hospital quality. Providers whose patients experience a lot of adverse events would face high premiums. As the insurance premiums become reflected in hospital and doctor fees, patients and their insurers would become aware of potentially large differences in the cost of care. Price competition would drive patients to lower-cost, higher-quality care.

The entire article is here.