Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Systematic Review of Estimates and the Methods Used to Produce Them
Georgetown University Law Center
University of Toronto - Faculty of Law; Georgetown University Law Center
November 21, 2012
Research Handbook on the Economics of Torts (Jennifer Arlen ed., Northampton, MA: Edward Elgar Pub 2012)
Georgetown Public Law and Legal Theory Research Paper No. 12-186
Georgetown Law and Economics Research Paper No. 12-042
Despite common claims made in policy debates, the theoretical connection between tort reform and medical malpractice insurance premiums is ambiguous. Simple models suggest reforms such as statutory damages caps reduce premiums. More elaborate models that account for changes in physician behavior suggest caps might increase or have no impact on premiums. A number of empirical studies have been conducted to estimate the impacts of caps on premiums, and several qualitative literature reviews have attempted to draw general conclusions from the literature. No review, however, has offered a comprehensive and systematic analysis of the full set of empirical studies. This chapter fills that gap. We provide a first glimpse at the wide methodological variations in the studies that employ regression analysis to estimate the impacts of caps on medical malpractice insurance premiums. We describe 16 empirical studies that report 197 estimates of the impact of caps on premiums. Using a theory-driven framework to develop a set of best practices, we find that little weight can be put on any one study due to broad methodological shortcomings. This chapter highlights the need for better data and additional research on the impact of caps on premiums.
Number of Pages in PDF File: 49
Keywords: insurance law, damages caps, medical malpractice insurance premiums, tort reform, economic damages, non-economic damages
JEL Classification: K00, K10, K13, K19Accepted Paper Series
Date posted: November 28, 2012
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