Medical Malpractice: April 2011 Update

Although the malpractice crisis—the inability of health care providers to obtain affordable liability insurance—has abated in many states, medical liability costs and pressures remain a concern. In addition, the perceived threat of litigation spurs “defensive medicine”—the practice of ordering services primarily to reduce the physician’s liability exposure rather than because they are medically necessary.

There is wide consensus that liability pressure undermines efforts to curb overuse of health services, although there is disagreement about the magnitude of its effect. This Update reviews the evidence on the effects of medical malpractice reforms published since the synthesis was released in 2006. Key findings include: Except for caps on noneconomic damages, there is little evidence that other traditional tort reforms affect medical liability costs or defensive medicine. Average awards are reduced by 20 percent to 30 percent, and premiums in states with caps on noneconomic damages rise 6 percent to 13 percent more slowly than premiums in states without caps.

There is evidence that tort reforms–particularly caps on noneconomic damages–reduce health spending, but the size of the reduction is subject to debate. Because of the lack of success of many traditional tort reforms, a number of innovated tort reforms are receiving increased attention. Although they show promise in theory, they have not been widely evaluated so the evidence of their effectiveness is weak.