President Bush spoke yesterday in Madison County, Ill., about legal reform. Excerpts follow:

Some of the cost increases in our health care system are necessary and worthwhile….But some costs are not necessary.

Many of the costs that we’re talking about don’t start in an examining room or an operating room. They start in a courtroom. What’s happening all across this country is that lawyers are filing baseless suits against hospitals and doctors. That’s just a plain fact. And they’re doing it for a simple reason. They know the medical liability system is tilted in their favor. Jury awards in medical liability cases have skyrocketed in recent years. That means every claim filed by a personal injury lawyer brings the chance of a huge payoff or a profitable settlement out of court. That’s what that means. Doctors and hospitals realize this. They know it’s expensive to fight a lawsuit, even if it doesn’t have any merit. And because the system is so unpredictable, there is a constant risk of being hit by a massive jury award. So doctors end up paying tens of thousands, or even hundreds of thousands of dollars to settle claims out of court, even when they know they have done nothing wrong.

That’s what’s happening in the system today. It’s a system that’s just not fair. It’s costly for the doctors; it’s costly for small businesses; it’s costly for hospitals; it is really costly for patients.

When those providing insurance have to pay the bills for enormous jury verdicts or out-of-court settlements, they have to raise premiums on physicians they cover. Specialists in high-risk practices like OB-GYN or neurosurgery are particularly vulnerable to lawsuits. So their premiums rise the fastest. You’re about to hear a couple of stories of folks in this area who can testify to that fact.

Because junk lawsuits are so unpredictable, they drive up insurance costs for all doctors, even for those who have never been sued; even for those who have never had a claim against them. When insurance premiums rise, doctors have no choice but to pass some of the costs on to their patients. That means you’re paying for junk lawsuits every time you go to see your doctor. That’s the effect of all the lawsuits. It affects your wallet. If you’re a patient, it means you’re paying a higher cost to go see your doctor. If part of the national strategy has got to be to make sure health care is available and affordable, health care becomes less affordable because of junk lawsuits.

And that’s what the people of Southern Illinois and the people of America must understand, that every time you read about big jury verdicts or out-of-court settlements or lawsuits being filed here or there, you’re paying for it.

For some physicians, even raising costs for patients isn’t enough to afford the premium increases caused by these lawsuits. And so, physicians are faced with a terrible choice: give up medicine entirely, or to move to another place where they can afford to practice medicine. And that problem affects all doctors from family practitioners in rural towns to surgeons in big city hospitals.

In 2003, almost half of all American hospitals lost physicians or reduced services because of medical liability concerns. Think about that. One-half of all American hospitals lost physicians. Over the past two years, the liability crisis has forced out about 160 physicians in Madison and St. Clair counties alone. When doctors move or close their practices, guess who suffers. The patients; the people who live in these good town in this part of the world. Pregnant women have to travel longer distances for checkups. Accident victims lose critical minutes in transit to faraway emergency rooms. New residents, people you’re trying to get to come and live in your communities have a hard time finding doctors willing to accept extra patients. And that causes the quality of life in your community to deteriorate. It’s a problem that we must address.

America’s health care professionals should be focused on fighting illnesses, not on fighting lawsuits. Junk lawsuits change the way docs do their job. Instead of trying to heal the patients, doctors try not to get sued. Makes sense, doesn’t it? If you’re worried about getting sued, you’re going to do everything you can to make sure you don’t get sued. That’s why doctors practice what’s called defensive medicine. That means they’re writing prescriptions or ordering tests that really aren’t necessary, just to reduce the potential of a future lawsuit.

They have specialists who stop taking emergency room calls. Doctors turn away patients with complicated, life-threatening conditions because they carry the highest risk for a lawsuit. Defensive medicine drives a wedge between the doctors and the patients, and defensive medicine is incredibly costly for our society. Altogether, defensive medicine drains some $60 billion to $100 billion from the economy. Defensive medicine raises medical bills for patients and increases insurance costs for employers and it takes money away that small businesses could use to invest and expand.

This liability system of ours is, what I’m telling you, is out of control. And you people in this area and the doctors in this area understand what I’m talking about. A recent study ranked Madison County the number one place in the country for trial lawyers to sue.

Let me share some of the stories of the folks I met with today. I think this will help clarify what I’m trying to say to you. Dr. Chris Heffner is with us. He’s a neurosurgeon from Belleville Memorial and St. Elizabeth hospitals. Raise your hand, Doc. He is one of only two neurosurgeons still practicing south of Springfield, Ill. You’ve got two people in the area. In just two years, his annual premiums have more than doubled, from $131,000 a year to $265,000 a year. And at the same time, his amount of insurance coverage has been cut in half.

A few years ago, Chris decided that closing his head trauma part of his practice was the only way he could afford to stay in this area. He told me he loves living here in this part of the world. He likes to raise his family here. He and his wife made a tough decision to stay here, in spite of the fact that his premiums doubled and he got half the coverage. And so the only way he could stay here and to provide a level of care that he wants everybody to have was to cut out part of his practice. He still treats dozens of patients with spinal cord injuries, but now brain trauma victims in Southern Illinois have to be airlifted across the river to St. Louis. He said, “It’s very distressing. I spent years of training to do brain surgery. It’s a big part of my life. I made a commitment to stay here, but I had to make adjustments to keep the ax from falling.” The system needs to be fixed.

Dr. Greg Gabliani is with us. He’s from Alton, and he is a cardiologist. He was raised in Quincy and he moved to Madison County in 2001, even though his colleagues warned him about the medical liability crisis here. In three years, his premiums have risen from $12,500 to $60,000 a year – three quick years. Last year he had to stop performing certain procedures to bring his costs under control. He said, “You either have to change the nature of your practice or you have to leave.” He didn’t want to leave. So he’s having to cut back on his services. We’ve got a problem, folks.

I met with Bob Moore. He’s the CEO of Red Bud Regional Hospital. There’s big Bob. He’s a father of six, I want you to know. His hospital has a long tradition of delivering babies, but this past November, he made the difficult decision to close his OB unit. The malpractice – see, he had the – they employ the doctors in his hospital. They become the employer. They’re going to cover the insurance for them, and it doubled from $150,000 to $270,000 – more than doubled. They’re paying $270,000 a year now. That’s a lot for a little hospital in a small town.

Red Bud used to handle 120 deliveries a year. But now a lot of the women have to drive an hour to get to an OB unit. He said, “You wouldn’t get an OB/GYN to come here. It’s affecting rural medicine.” “It” happens to be the medical liability crisis, is affecting rural medicine. Lawsuits are affecting rural medicine. It’s a societal issue that has to be dealt with.

Leslie Scariano is with us. She is a OB/GYN from Alton. She spent her entire career as a doctor in Southern Illinois and she has never been sued. She is a good doc. She shut down her practice on December the 31st of this year because her premiums have skyrocketed out of control. That means she couldn’t afford to stay in practice. She had a choice to make: quit practicing medicine or go broke. She said, “I don’t want to quit practicing medicine and I’m not going broke, so I’m going to move to Colorado.” You lost a good soul from this part of the world because the system is out of control. Leslie’s premiums will be about 80 percent lower in Colorado that here in Illinois.

I met with Kim Vogel, who is right with us – yes, there she is. She was one of Leslie’s patients. She’s expecting her second child early next month – like, soon. When she found out she was pregnant last year, Kim started seeing the OB-GYN that delivered her daughter, Katie. That OB-GYN moved to Tennessee. Then she started seeing Leslie. Leslie is moving to Colorado. Kim is now on her third OB-GYN, and she’s worried about it. She said, “I understand the doctors’ position. I don’t blame them. But as a patient, I see them leave and I think, what am I going to do now and where does that leave me? I feel like I’ve lost control over how my pregnancy will go.”

Unfortunately, this is not just a story confined to this part of the world. This is a story of pregnant moms all over America who are wondering whether or not they’re going to be able to find good quality health care for their child and themselves.

I’ve come to this part of the world because I want to assure you that, one, I understand the problem and I intend to work with Congress to do something about it. You know, when I was the Governor of Texas, I felt that we could solve medical liability issues at the state level. And there was two things wrong with that strategy. One is that a state would pass good medical liability reform, and all the trial lawyers would do is go to the state that has lousy medical liability law. So you’re not solving the problem, you’re just shifting the problem. You’re making the quality of life issue go from one area – the deterioration of quality of life issue go from one area to the next. That didn’t seem to make any sense.

But the other thing I discovered is that because of medical liability problems and lawsuits and increasing premiums and the defensive practice of medicine, your federal budget spends $28 billion a year extra money. See, we have to pay for Medicaid and Medicare and veterans’ benefits. The rising cost of health care, the number of lawsuits, the defensive practice of medicine is driving up the cost to our taxpayers. Medical liability reform is a national issue and it requires a national solution.

So I went to Congress with some proposals that I think are fair, proposals that will build confidence in the judicial system. Nobody likes to come to a part of the world that says the judicial system is out of control and people lose confidence in it. We’ve got to have confidence in the fairness of our system. We want people who are harmed to be able to get – have their day in court and get fair treatment in the courts of law. But we want – we don’t want a system that’s so tilted the other way that it runs good doctors out of business and makes it hard for hospitals to deliver care.

I believe a victim of a legitimate medical error should be allowed to collect full economic damages, 100 percent of the cost of their medical care and recovery, plus economic losses for the rest of their life. Seems to be fair, if you get hurt. And when appropriate, injured people

should be allowed to collect reasonable noneconomic damages. And in the case of truly egregious wrongdoing, patients should be entitled to punitive damages. But there needs to be some reason, when it comes to noneconomic damages in the system, and that’s why I proposed a hard cap of $250,000 on noneconomic damages.

Interestingly enough, the state of California has a cap on noneconomic damages that was enacted in 1975. Patients in that state see their claims settled a third faster than states without those limits. In other words, patients are treated more fairly where there’s a cap. And since 1975, insurance premiums for California doctors have become much more affordable premiums than anywhere else in the country – than in most states. Caps on noneconomic damages work. It’s a good idea and the Congress ought to adopt them.

You see firsthand what happens when the system gets out of control – 160 docs leave two counties. People understand that no patient has ever been healed by a frivolous lawsuit; no small business has ever grown because of a frivolous lawsuit; the cause of justice is never served by frivolous lawsuit.