Will Medical Malpractice Tort Reform Reduce Health Care Costs?

In 2003, the State of Texas famously adopted medical malpractice tort reform as part of its efforts to reduce health care costs. There has, and still is, a great national debate on the effects that this type of tort reform would have on health care costs, if any. Researchers in Texas set out to find the answer.

A group of researchers from the University of Texas that included Charles Silver, who is a professor of government and the Roy W. and Eugenia C. MacDonald Endowed Chair in Civil Procedure, conducted the study entitled, “Will Tort Reform Bend the Cost Curve? Evidence from Texas.” Published in Volume 9 of the Journal of Empirical Legal Studies, the study found that health care costs in Texas were not reduced as a result of limiting payouts in medical malpractice lawsuits.

The researchers studied changes in Medicare spending to help them test the claim that hard caps on malpractice damages would reduce overall healthcare spending due to less defensive medicine. They looked at Medicare spending in counties with high and low claim rates both before and after the implementation of the new law. The result was no change in doctor’s fees for seniors and disabled patients between 2002 and 2009.

The idea behind medical malpractice tort reform is that when doctors face a great risk of being sued, they practice medicine on the defense by focusing on taking precautions to limit their risk of liability, even if that means extensive treatment or testing on patients. Proponents of the tort reform argue that this causes excess spending which in turn, drives up healthcare costs. The theory continues that by placing caps on medical malpractice awards, doctors feel better protected and therefore, can choose the best health care for their patients. Furthermore, they argue that more doctors and specialists will be available to patients when the fear of being sued is removed.

As the Texas study points out, this thinking is fundamentally flawed. In addition to not lowering costs, as journalist Mary Ann Rose of the American-Statesman, pointed out: “Since tort reform, some Texas residents have complained that they cannot find a lawyer to pursue a malpractice case because of the $750,000 cap on payouts for pain, suffering, disfigurement and mental anguish. The limit often makes litigation cost prohibitive, patients and lawyers said.” As for the increase in available physicians, the study also pointed out that Texas saw a slower growth in the addition of direct patient care doctors after 2003.

Sources:

UT Law, “Professor Charles Silver’s research on tort reform reveals no cost savings to Medicare,” Faculty News

Statesman.com, “New study: Tort reform has not reduced health care costs in Texas,” Mary Ann Roser, 20 June 2012