VII. Key Issues: Regulation & Reform >> B. Health Care Regulation >> Medical Tort System (Last update: 8.16.16)
The medical tort system serves both as a compensation mechanism as well as a potential deterrent to medical injury. Clinicians are expected to be more likely to change their behavior if the odds of getting caught increase and/or the financial consequences of negligence increase. States historically have been responsible for establishing and enforcing rules governing tort liability in medical care and other settings. A number of states have adopted major reforms such as caps on non-economic damages or caps on attorneys’ fees. The focus in this section is on measuring the overall cost of the current “system” rather than measure the potential gains from reforming it. In the current system, both facilities and health professionals may be involved in decisions to purchase professional liability insurance. Since it is up to individual patients to decide whether to sue in a given case, not surprisingly a relatively high fraction (98%) of actual victims of negligence opt not to sue. Conversely, less than one in five malpractice claims appear to involve actual negligence (Studdert et al. 2004). The Duke Center for Health Policy has developed a draft working paper assessing the costs and benefits of the medical tort system.
See Gateway page on Medical Errors for a discussion of prevalence, cost and causes of medical errors.
- Economics of Medical Malpractice (2009). Course syllabus for Frank Sloan, Duke University.
- Government Accounting Office (GAO). 2003. Medical Malpractice: Implications of Rising Premiums on Access to Health Care, GAO-03-836.
Health Care Liability Alliance, a site including trends in lawsuits, lawsuits and higher health costs, junk science in courtroom, health care product liability and other background information.
Federal Medical Tort Reform
- Avraham, Ronen et al, “The Impact of Tort Reform on Employer-Sponsored Health Insurance Premiums,” Working Paper Series, National Bureau of Economic Research, September 2009;
- Congressional Budget Office (CBO). 2013. Limit Medical Malpractice Torts, November 13, 2013. This table estimates the economic impact of medical malpractice tort limits.
- Congressional Budget Office. Medical Malpractice Tort Limits and Health Care Spending. April 1, 2006.
- Congressional Budget Office (CBO). 2004. Economic and Budget Issue Brief: Limiting Tort Liability for Medical Malpractice, January 8, 2004.
State Medical Tort Reform
- Avraham, Ronen, Leemore S. Dafny, Max M. Schanzenbach. The Impact of Tort Reform on Employer-Sponsored Health Insurance Premiums. NBER Working Paper No. 15371
Issued in September 2009. We evaluate the effect of tort reform on employer-sponsored health insurance premiums by exploiting state-level variation in the timing of reforms. Using a dataset of healthplans representing over 10 million Americans annually between 1998 and 2006, we find that caps on non-economic damages, collateral source reform, and joint and several liability reform reduce premiums by 1 to 2 percent each. These reductions are concentrated in PPOs rather than HMOs, suggesting that can HMOs can reduce “defensive” healthcare costs even absent tort reform. The results are the first direct evidence that tort reform reduces healthcare costs in aggregate; prior research has focused on particular medical conditions.
- Dafny LS, Avraham R, Schanzenbach M. The impact of tort reform on employer-sponsored health insurance premiums. J Law Econ Organ. 2012;28(4):657-686.
- Encinosa, William E., and Fred J. Hellinger. Have State Caps On Malpractice Awards Increased The Supply Of Physicians? Health Affairs Web Exclusive, May 31, 2005, W5-250-258.
- Hunter, J. Robert, Gillian Cassell-Stiga, and Joanne Doroshow. True Risk: Medical Liability, Malpractice Insurance and Health Care. New York: Americans for Insurance Reform, July 22, 2009.
- Mello, Michelle M. 2006. Medical Malpractice: Impact of the Crisis and Effect of State Tort Reforms.
- National Conference of State Legislatures (NCSL). 2007. State Medical Liability Laws 2007.
- Physician Insurers Association of America (PIAA). 2009. State Enactments of Selected Health Care Liability Reforms.
- Thorpe, Kenneth E. 2004. The Medical Malpractice ‘Crisis’: Recent Trends and the Impact of State Tort Reforms. Health Affairs Web Exclusive 23 (January – June): 20-30.
- Weiss, Martin D., Melissa Gannon, and Stephanie Eakins. 2003. The Impact of Non-Economic Damage Caps on Physician Premiums, Claims Payout Levels, and Availability of Coverage.
- Physician spending and subsequent risk of malpractice claims: observational study
- Kessler DP, McClellan M. Do doctors practice defensive medicine? Q J Econ. 1996;11:353-390. NBER paper version.