Low Costs of Defensive Medicine, Small Savings from Tort Reform

In this paper, the authors present the costs of defensive medicine in 35 clinical specialties to determine whether malpractice liability reforms would greatly reduce health care costs.

Defensive medicine includes tests and procedures ordered by physicians principally to reduce perceived threats of medical malpractice liability. The practice is commonly assumed to increase health care costs. The results of studies of the costs of defensive medicine have been inconsistent. We found that estimated savings resulting from a 10 percent decline in medical malpractice premiums would be less than 1 percent of total medical care costs in every specialty. These savings are lower than most previous estimates, and they suggest that the presumed impact of tort reform on health care costs may be overstated.

Because medical malpractice insurance premiums account for less than 2 percent of total estimated national health spending, some observers assert that tort reform would do little to help control rising health care costs. However, others point out that physicians’ efforts to avoid malpractice litigation—by ordering marginally useful tests, performing marginally useful procedures, and prescribing marginally useful medications—can add billions of dollars to our national health care bill.