How Liability Law Affects Medical Productivity
Daniel P. Kessler
Stanford Graduate School of Business; National Bureau of Economic Research (NBER)
Mark B. McClellan
Brookings Institution; Council of Economic Advisors; National Bureau of Economic Research (NBER); Stanford Graduate School of Business
NBER Working Paper No. w7533
Previous research suggests that "direct" reforms to the liability system -- reforms designed to reduce the level of compensation to potential claimants -- reduce medical expenditures without important consequences for patient health outcomes. We extend this research by identifying the mechanisms through which reforms affect the behavior of health care providers. Although we find that direct reforms improve medical productivity primarily by reducing malpractice claims rates and compensation conditional on a claim, our results suggest that other policies that reduce the time spent and the amount of conflict involved in defending against a claim can also reduce defensive practices substantially. In addition, we find that "malpractice pressure" has a larger impact on diagnostic rather than therapeutic treatment decisions. Our results provide an empirical foundation for simulating the effects of untried malpractice reforms on health care costs and outcomes, based on their predicted effects on the malpractice pressure facing medical providers.
Number of Pages in PDF File: 45working papers series
Date posted: April 18, 2000
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.797 seconds