Analysis — Obama’s view: Not a lot left to debate in health care law

Introduction

By devoting just two minutes to health care reform in his State of the Union address — and not mentioning it until half way through the remarks — President Obama was signaling Americans that he believes the reform debate is over, that Republicans would be wasting precious time by “refighting the battles of the last two years.”

While noting that “anything can be improved” and that he would welcome ideas to improve the bill he signed into law last March, Obama offered only two subjects that might warrant renewed attention — and one of those is sure to set off alarms among consumer advocates and trial lawyers, though changes seem unlikely.

Obama’s first topic was a provision of the law mandating more IRS filings – a provision that is universally loathed by employers. Changing it will likely draw little opposition, even if doing so means the loss of billions of dollars every year in tax revenue that drafters of the legislation were counting on to help pay for expansion of coverage. The president called the provision a “flaw…that has placed an unnecessary bookkeeping burden on small businesses.” The IRS has estimated that the government loses more than $300 billion in tax revenue annually because of inadequate reporting requirements. But since businesses hate the new requirement and lawmakers are not likely to fall on their swords to preserve it, that provision will likely be the first — and maybe the only one—that will draw the bipartisan support necessary to strip it from the measure.

Consumer advocates and trial lawyers will care far less about that provision than the other topic on which the president said he was open to working with Republicans. In a line that brought GOP members to their feet, the president said he would welcome their ideas on medical malpractice reform to reduce overall health care spending and, ultimately, the deficit.

“I’m willing to look at other ideas to bring down costs,” he said, “including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits.”

Even though the president adopted the Republican’s language—“frivolous lawsuits” is a focus group-tested term long used by the GOP and the American Medical Association and corporate proponents of tort reform — it is doubtful that Obama and the loyal opposition will share much common ground when it comes to the details of remaking malpractice laws.

Republicans have long championed a cap on liability, as Texas enacted a few years ago, limiting punitive (pain and suffering) damages to a certain dollar amount. In Texas, the cap was set at $250,000. Trial lawyers and consumer advocates oppose such caps, and the president probably will as well.

Instead, the president has indicated in the past that he favors another path to reducing lawsuits: encouraging the use of evidence-based medicine. Getting Republicans to go along with that approach will be a heavy lift; they have been highly critical of provisions in the law that establish pilot projects to explore the effectiveness of evidence-based medicine. In fact, Republicans will likely try to cut off funding for those and other pilot projects as part of their strategy to thwart the law’s implementation.

Peter Orszag, the former White House Director of the Office of Management and Budget, explained the president’s thinking on malpractice reform in an October 20, 2010, op-ed in The New York Times.

“The traditional way to reform medical malpractice law has been to impose caps on liability—for example, by limiting punitive damages to something like $500,000,” Orszag wrote. “A far better strategy would be to provide safe harbor for doctors who follow evidence-based guidelines. Anyone who could demonstrate that he has followed the recommended course for treating a specific illness or condition could not be held liable.”

So while the president seemed to be throwing a bone to Republicans in the name of bipartisanship, tort reformers will likely be disappointed if they think the president and Republicans in Congress will agree on how to make “frivolous lawsuits” a thing of the past.

Commentator Wendell Potter, a former insurance company executive, is the author of Deadly Spin: An Insurance Company Insider Speaks Out On How Corporate PR is Killing Health Care and Deceiving Americans.