The Impact of Tort Reform on Intensity of Treatment: Evidence from the Heart Patients

Abstract:     
This paper employs a unique data set comprised of a large sample of hospital in-patients to analyze the effect of tort reform on physician behavior. We examine a sample of 550,000 individuals aged 30 to 64 diagnosed as having had a heart attack between the years 1998 and 2005. We consider a number of different measures of intensity of treatment, including (1) total charges; (2) whether any procedure was done; (3) the number of procedures; and (4) the choice of major interventions (angioplasty versus bypass). We find that tort reform decreases intensity of treatment. More importantly for inference, the effect is most pronounced for the young, the group that poses the greatest liability risk. In addition, we find no evidence that tort reform increased intensity of treatment for those covered by insurance, suggesting that tort reform did not increase “induced demand.”

Keywords: defensive medicine, induced demand, offensive medicine, tort reform

Working Paper Series