Budget doubles malpractice grants to states in FY '12, avoids reform recommendations

President Obama wants to double down on state efforts to reform the medical liability system in the upcoming fiscal year, but he is avoiding proposals for substantial policy changes as Republicans are charging forward on the issue, according to a White House budget summary.

The massive healthcare reform law passed last year included $250 million over five years in demonstration grants to states to develop and implement alternatives for current medical liability reform. Grants were supposed to start during fiscal 2011, but the reform law passed after the president’s budget recommendation last year, and Congress never approved a budget bill for fiscal 2011.

The president’s budget request, detailed Monday morning, asks for $100 million to kick start the demonstration grants in fiscal 2012, followed by $50 million for each fiscal year through 2015.

The request comes as Republicans are pitching tort reform as their major – and so far, most defined – feature of efforts to replace the president’s healthcare reform law. Their bill would impose a $250,000 cap on noneconomic medical malpractice damages and set new timeframes for filing lawsuits.

House Republicans' efforts to pass the bill hit turbulence last week when a member of the Tea Party Caucus questioned the bill’s constitutionality. Rep. Ted Poe, a Texas Republican, raised concerns that the bill might interfere with states’ limits on medical liability lawsuits.

Arguing that tort reform would allow doctors to cut down on expensive and unnecessary defensive medicine, Republicans are pointing a projection by the Congressional scorekeeper that typical tort reform proposals would be a money-saver. The nonpartisan Congressional Budget Office in 2009 said typical tort reform proposals would shave $54 billion from the deficit over 10 years.

Democrats, having the strong backing of trial lawyers, are historically resistant to overhauling medical malpractice laws, but Obama has opened the discussion several times.

The administration announced $25 million in medical liability grants in June 2010 after Obama called for the money in his September 2009 healthcare address to a joint session of Congress. In his State of the Union address last month, Obama posed medical liability reform as an area in which Democrats and Republicans can work together.

Some Senate Democrats were hesitant to embrace the president’s call for malpractice reform in the aftermath of the State of the Union address. Sen. Sheldon Whitehouse (D-R.I.) said states should have an opportunity to let the liability reform grants work before Congress makes too many changes.

"I think developing the state program is a start that's worth exploring further before we get too far down the road," Sen. Sheldon Whitehouse (D-R.I) told The Hill after the president's speech. "The Constitution is pretty serious about people's right to a jury, and as we have so many people in the [Capitol] building now who are seeking to anchor themselves to the Constitution, they'd do well to reflect [on] that."

The American Medical Association, which is supporting the Republican tort reform bill, applauded the White House for frontloading the demonstration grants.

“The increased funding in the president’s budget for testing innovative medical liability measures is an important way to augment efforts to enact the proven reforms such as those included in the [Republican bill],” AMA president Cecil Wilson said in a statement.