Damage Caps and the Labor Supply of Physicians: Evidence from the Third Reform Wave

Nine states adopted caps on non-economic damages during the third medical malpractice reform wave from 2002-2005, joining twenty-two other states with caps on non-economic or total damages. We study the effects of these reforms on physician supply. Across a variety of difference-in-differences (DiD), triple differences, and synthetic control methods, in both state- and county-level regressions, we find, with tight confidence intervals, no evidence that cap adoption leads to an increase in total patient care physicians, increases in specialties that face high liability risk (with a possible exception for plastic surgeons), nor increases in in rural physicians.

The online appendix is available from SSRN at http://ssrn.com/abstract=2761901.

Keywords: medical malpractice, tort reform, physician supply

JEL Classification: I11, I18, K23, K32

Suggested Citation: Suggested Citation

Paik, Myungho and Black, Bernard S. and Hyman, David A., Damage Caps and the Labor Supply of Physicians: Evidence from the Third Reform Wave (June 22, 2016). nearly final version, published in 18 American Law and Economics Review 463-505 (2016), Northwestern Law & Econ Research Paper No. 14-11, Illinois Program in Law, Behavior and Social Science Paper No. 14-36, Available at SSRN: https://ssrn.com/abstract=2470370 or http://dx.doi.org/10.2139/ssrn.2470370