Damage caps and defensive medicine, revisited

Myungho Paik, Bernard Black*, David A. Hyman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies, using a difference-in-differences (DiD) approach, find lower Medicare spending for hospital care after states adopt caps on non-economic or total damages (“damage caps”), during the “second” reform wave of the mid-1980s. We re-examine this issue in several ways. We study the nine states that adopted caps during the “third reform wave,” from 2002 to 2005. We find that damage caps have no significant impact on Medicare Part A spending, but predict roughly 4% higher Medicare Part B spending. We then revisit the 1980s caps, and find no evidence of a post-adoption drop (or rise) in spending for these caps.

Original languageEnglish (US)
Pages (from-to)84-97
Number of pages14
JournalJournal of Health Economics
Volume51
DOIs
StatePublished - Jan 1 2017

Keywords

  • Defensive medicine
  • Healthcare spending
  • MEDICARE
  • Medical malpractice
  • Tort reform

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health

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