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The Impact of the 2003 Texas Medical Malpractice Damages Cap on Physician Supply and Insurer Payouts: Separating Facts from Rhetoric


Charles Silver


University of Texas at Austin - School of Law

David A. Hyman


University of Illinois College of Law

Bernard S. Black


Northwestern University - School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

September 2008

as published in Texas Advocate, pp. 25-34, Fall 2008
U of Texas Law, Law and Econ Research Paper No. 134
U Illinois Law & Economics Research Paper No. LE08-028

Abstract:     
In 2003, Texas adopted House Bill 4 ("HB 4") which capped non-economic damages in medical malpractice cases and included several other smaller reforms. To proponents, HB 4 is a silver bullet, encouraging physicians to move to Texas by reducing frivolous lawsuits, preventing excessive damage awards by run-away juries, and reducing malpractice insurance premiums. To critics, it is ineffective (because it will neither materially increase the number of physicians, lower malpractice premiums, nor reduce health care costs) and unfair (because it forces injured patients to accept inadequate compensation and hits plaintiffs who are severely injured, women, children, or elderly especially hard).

In this short paper, prepared for a special issue on the effects of HB 4, we present new evidence of its effect on the number of physicians in Texas. There is, as yet, no evidence that HB 4 increased the number of physicians involved in direct patient care, but some evidence consistent with a delayed effect. There may have been a modest increase in the number of specialists engaged in direct patient care, in line with population growth. We also summarize our findings from a previous article on how the damages cap will affect payouts. We estimate that, if the same cases were brought, the cap would result in an18-25% drop in per-case payouts in settled cases, and a 27% drop in tried cases. We also find that a cap on non-economic damages will have different effects on different groups of plaintiffs, with larger effects on the unemployed and deceased, and likely on the elderly as well. Because one would expect the cap to dissuade some plaintiffs from suing at all, especially those in the more severely affected groups, the cap's effect on insurers' costs -- and thus its long-run effect on malpractice insurance premiums -- will likely exceed our per-case estimates.

Number of Pages in PDF File: 11

Keywords: medical malpractice, tort reform, physician supply, damage caps

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Date posted: August 19, 2008 ; Last revised: December 30, 2008

Suggested Citation

Silver, Charles and Hyman, David A. and Black, Bernard S., The Impact of the 2003 Texas Medical Malpractice Damages Cap on Physician Supply and Insurer Payouts: Separating Facts from Rhetoric (September 2008). U of Texas Law, Law and Econ Research Paper No. 134; U of Texas Law, Law and Econ Research Paper No. 134; U Illinois Law & Economics Research Paper No. LE08-028. Available at SSRN: http://ssrn.com/abstract=1139190

Contact Information

Charles M. Silver (Contact Author)
University of Texas at Austin - School of Law ( email )
727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1337 (Phone)
512-232-1372 (Fax)
David A. Hyman
University of Illinois College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
Bernard S. Black
Northwestern University - School of Law ( email )
375 E. Chicago Ave
Unit 1505
Chicago, IL 60611
United States
512-503-2784 (Phone)

Northwestern University - Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)
European Corporate Governance Institute (ECGI)
Brussels
Belgium
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