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February 26, 2009

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FrankMCook

An often overlooked fact is that our health care system impacts our tort system. A person without health insurance who is injured by a product must look to the manufacturer's insurance to cover the medical bills. If we had universal health care, consumers would not need to be able to sue to recover their medical expenses and in most cases the matter would end there as the remaining damages would not be worth pursuing.

That of course leaves the policy question of whether or not a reformed health care system should have some recovery right against the manufacturer. I'm inclined to say no, but reasonable minds can differ. Perhaps there is experience to be considered from other countries.

Joel Dubow

Prof. Ben-Shahar, errs by stating that Reputational remedies outweigh Litigational remedies for consumer damages. That may be true in more homogeneous societies like Japan. The US is more materialistic and reputational damages have less impact than those financially imposed by litigation. I don't consider this a good outcome.

Yet in a study of did comparing US and Japanese corporate methodologies for optimizing manufacturing operations I found that the Japanese included a term for "losses to society" for bad product while US firms did not. This led to lower emphasis on quality. If there was no price for poor quality, either statutory or litigation based, then the process was calculated to optimize near term returns. Witness the environment, the quality of automobiles and numerous other examples.

Litigation is the US way of incorporating "losses to society" in optimizing manufacturing and related industries. Without it we end up with poorer quality and less safe products. That is too bad, but at this time I see no alternative.

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