Direct costs of malpractice, which include premiums, damage awards in excess of premiums, and associated litigation costs, represent no more than two percent of health care costs. Thus, tort reforms can have a substantial effect on health care costs only if they affect the amount of healthcare services provided.
Sorry, you must not work in health care.
This is just the malpractice part. What's not in the "1-2%" is what I'll call defensive medicine.
I have a colleague who is an orthopedic surgeon. He will not perform surgery on you unless you had an MRI or CT performed the day before. Many, many surgeons do this. And blood work. Update a complete panel. CBC, SMA, drug panel--the whole smash.
It does not matter if you had an MRI last week or your blood tests are two days old.
Why?
He does not want to get sued. You are paying for his defensive medicine.
You might ask "what does having an MRI prevent being sued?" There is a type of patient and a type of lawyer who look for clerical errors and then sue over them--not a negligence outcome. Not having an MRI the day before could be argued as not being the best care.
So what does it really mean? My colleague makes good money being a surgeon and would make less if he had a mark on his insurance record--just or unjust. With the surge in amateur ranking systems this means a lot to a practice.
Do I have a solution? Yes. Make it easier to become a physician or primary provider in the US. An ortho makes between $320K and $550K. That's in large part because of the amount of schooling (4 + 4 years after high school) , residency (4-5 years), fellowship (2 years), working for nearly free (a couple of years).
Make the PA an attractive choice in patients seeking care. Make a Family practice hospitalist specialty that requires 2 years grad school and 2 of residency.
Here's the last one: Make a non-profit hospital standards higher to keep non profit. Non-profit does not mean minimal bureaucratic excess.