Abstract

http://ssrn.com/abstract=2110656
 


 



Do Doctors Practice Defensive Medicine, Revisited


Myungho Paik


Hanyang University - College of Policy Sciences

Bernard S. Black


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

David A. Hyman


University of Illinois College of Law

October 21, 2014

Northwestern Law & Econ Research Paper No. 13-20
Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-21

Abstract:     
Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies find a drop in spending following the adoption of caps on non-economic or total damages (“damage caps”), principally during the 1980s. We re-examine this issue in several ways. First, we study health care spending trends in the nine states that adopted caps during the “third reform wave,” from 2002-2005. Across a variety of difference-in-difference (DiD) methods, damage caps have no significant impact on Medicare Part A (hospital) spending, but lead to 4-5% higher Medicare Part B (physician) spending. Consistent with the DiD analysis, in county fixed effects regressions over 1998-2010, Part B spending is higher in states with lower med mal claim rates. We then revisit the 1980s caps, using stronger covariates. We find no evidence of a post-adoption drop (or rise) in spending for these caps. We conclude that (i) there is no evidence that damage caps reduce overall Medicare spending, and (ii) third-wave caps induce a gradual increase in Part B spending.

Number of Pages in PDF File: 48

Keywords: medical malpractice, tort reform, defensive medicine, Medicare, healthcare spending

JEL Classification: I11, I18, K23, K32


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Date posted: July 18, 2012 ; Last revised: October 22, 2014

Suggested Citation

Paik, Myungho and Black, Bernard S. and Hyman, David A., Do Doctors Practice Defensive Medicine, Revisited (October 21, 2014). Northwestern Law & Econ Research Paper No. 13-20; Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-21. Available at SSRN: http://ssrn.com/abstract=2110656 or http://dx.doi.org/10.2139/ssrn.2110656

Contact Information

Myungho Paik (Contact Author)
Hanyang University - College of Policy Sciences ( email )
222 Wangsimni-ro Seongdong-gu
Seoul, 133-791
Korea, Republic of (South Korea)
Bernard S. Black
Northwestern University - Pritzker School of Law ( email )
375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (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
David A. Hyman
University of Illinois College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
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