PAIN AND SUFFERING….Dwight Meredith has a question about President Bush’s tort reform proposal:

President Bush went to the battle ground state of Pennsylvania yesterday to announce his proposed tort reform initiative for medical malpractice suits. The core of the proposal is a $250,000 cap on the recovery of non-economic damages in medical malpractice cases.

….Why was the cap set at $250,000?

Well, $250,000 sounds like a lot of money, doesn’t it? But let’s take a more realistic look at things, shall we?

Let’s see….how about, say, a 30-year-old who had the wrong leg amputated and ends up in a wheelchair suffering from phantom pain for the rest of her life? Life expectancy is about 50 more years and a prudent guess for long-term real rate of return if the money is invested is about 3%. So what does that get her?

According to this handy dandy annuity calculator, she gets less than $10,000 per year.

Since pain and suffering is a lifetime deal, it makes sense for payouts to be made annually for someone’s lifetime. After all, a 30-year-old is going to suffer longer than a 70-year-old. So why not talk about payout caps in those terms?

That’s easy: because it suddenly doesn’t sound so good. $250,000 sounds like a generous amount to most people. $10,000 per year sounds kind of stingy.

Presentation is everything, isn’t it?

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