GOP-Proposed Tort Reform Would Reduce Health Care Costs, Analysts Say

President Obama is taking a small step on one issue, malpractice lawsuit reform, that Republicans believe is an easy way to reduce health care costs.

Obama's latest proposal "incorporates the best ideas from Democrats and Republicans, including some of the ideas that Republicans offered during the health care summit, like funding state grants on medical malpractice reform," Obama said this week.

The president agrees with medical profession that defensive medicine, doctors ordering unnecessary tests to protect themselves, is pushing up the cost of health care.

"The courts are clogged up with these cases, physicians are afraid of being hauled into court and as a result order tests they ordinarily would not order," said Dr. Cecil Wilson of American Medical Association.

Obama is only proposing to give the states $25 million for planning grants and demonstration projects, not national reform.

But a liberal think tank found the some states have already tried such reforms and that expanding them nationally would reap massive savings.

"We found that roughly, between $92 to $207 billion dollars per year can be saved from reducing defensive medicine," David Kendall, a senior fellow with Third Way, told Fox News.

How? What some states have done is to allow unlimited "actual" damages for injuries, but cap damages for what is called "pain and suffering" -- limiting that to $250,000.

But doctors would still worry about their reputations, so analysts don't think that would end unnecessary testing. But something else might.

"The specific proposal is for a health court or something like it, where it would be a specialized court that would be devoted just for making medical decisions and medical judgments," Kendall said.

"Another would be to say that physicians who practice according to certain scientific principles, performance measure, would be presumed to have done it right, and they could introduce that evidence in court," Wilson said.

Analysts say only 2 percent of injured patients actually file suit, in part because it's such an onerous and drawn-out process. So they say specialized courts and other reforms might actually make it easier for injured patients to recover damages.

"The speed at which you could get compensated would be a matter of months," Kendall said. "Right now, it takes an average of three to five years for a patient to get an award."

And with longer lawsuits, more than half the money can go to lawyers and the courts. Doctors' groups point to the success of "tort reform" in Texas, which had been losing doctors by the thousands. After the reforms, it licensed the highest number of doctors in its history and brought care to many areas of the states that were begging for care.