Health Care: Tax Credit for "Negative Outcomes" Insurance

[tradesparrow]

Ensure that those harmed during medical treatment receive fair compensation while reducing the burden of costly malpractice litigation on the health care system by providing a tax credit for “negative outcomes” insurance purchased before medical treatment.

From: http://www.ronpaul2012.com/the-issues/health-care/



Could someone explain this idea in other words? As I understand it, doctors will get tax credit for the "malpractice/negative outcomes" insurance they buy. Correct?

 

[jm1776]

The negative outcomes insurance is purchased by the patient who receives the tax credit under a Bill proposed by Dr. Paul. A full explanation at the link.

http://paul.house.gov/index.php?option=com_content&task=view&id=282&Itemid=60

 

[tradesparrow]

Thanks for the link, JM.

So, hypothetically, a surgeon makes a mistake repairing my hand and now I cannot use it for life. I bought "Negative Outcome Insurance", and am given compensation.

What about the surgeon's malpractice insurance? Would his insurance help cover the cost of compensation? This is the point I am not clear on.


Thanks,
Sparrow

 

[jm1776]

I think the answer is, it depends. You would need to sue the doctor and win before his malpractice insurance would compensate you too. The amount is determined by the jury?

Assuming H.R.1498 was passed. Your premium for the insurance is a tax credit and your insurance award is non-taxable at the federal level anyway.

For your hypothetical let's say your insurance had a $1,000,000.00 max payout and based on your outcome they paid you the $1 million maximum.

You still have the option to sue for additional compensation where any jury award is split with the attorney and would be taxable as well.

I guess in cases where the Negative Outcome Insurance compensation is widely seen as inadequate litigation would still be pursued.

 

[tradesparrow]

Thanks for linking the bill.

Reading it, it seems that I would buy normal Medical Insurance AND Negative Outcome Insurance, but the government would pay me back for buying the Negative Outcome Insurance in the form of tax credit. In this way, I can be protected almost for free.

I don't see why this is necessarily better. The bill does not say who will decide whether the money should be awarded. People may still go to a court just as before to get even more money.

 

[jm1776]

The bill provides a positive incentive for two distinct alternatives to litigation. And does so without the force of government mandates, dictates or price fixing.

In the case of Negative Outcomes Insurance the harmed patient would submit a claim to the insurance company. The insurance company would pay the claim.

SEC. 3 Gives a huge incentive to accept binding arbitration over court action in the form of a tax free award should the arbitration find in favor of the patient. In this case the doctor could pay the award directly or rely on his malpractice insurance.

In the case of binding arbitration further court action would be barred.

In the case of an insurance award, as far as I know, it would still be possible pursue court action. But, given reasonable compensation by the insurance company how sympathetic would a jury be in their award amount? And how easy would it be to find a malpractice attorney to pursue the matter? Since they are typically paid as a percentage of the award.

It seems reasonable to expect the bill would cause a reduction in court cases. Just how much of a reduction we have no way of knowing. Ask a doctors group or hospital if even a 10% reduction in malpractice litigation would be welcomed? 50%?