Medical malpractice reform would reduce the annual federal deficit, saving the government $54 billion over 10 years, according to an analysis by the Congressional Budget Office.
The finding bolsters one of Republicans' top health care reform proposals, and provides them with momentum to press for tort reform to be included President Obama's sweeping health care legislation.
"I think that this is an important step in the right direction and these numbers show that this problem deserves more than lip service from policy-makers," said Sen. Orrin Hatch, the senior Republican on the Senate Finance Committee, which is to vote on its version of health care reform on Tuesday.
"Unfortunately, up to now, that has been all the president and his Democratic allies in Congress have been willing to provide on these issues," Hatch said in a written statement. "I look forward to having a continued comprehensive dialogue on this critical issue with CBO."
Many doctors pay $100,000 to $250,000 a year in malpractice insurance even if they've never had a judgment against them. Neurology leads the list of high-cost malpractice insurance. Obstetrics isn't far behind.
Supporters of tort reform argue that expense doesn't just drive up the price of medical care, it also leads to defensive medicine, meaning doctors order all sorts of tests they wouldn't otherwise order just to make sure they won't get sued.
Opponents of medical malpractice reforms say it is unfair to limit awards to individuals legitimately injured by a doctor's negligence.
Obama said last month in his address to a joint session of Congress that he would consider including tort reform in his plan.
Hatch pressed for an updated analysis from the CBO on the potential effects of tort reform proposals on the federal budget.
"I think this response from the CBO confirms that there is a growing problem regarding the costs of health care lawsuits," Hatch said. "In years past, the CBO mainly focused on the cost of doctors' malpractice insurance premiums and did not adequately address the tendency of doctors to use 'defensive medicine,' which does little to promote patient health and serves only to help doctors avoid being sued."