Damage Caps and Defensive Medicine: Reexamination with Patient Level Data

48 Pages Posted: 2 Aug 2016 Last revised: 13 Jun 2018

See all articles by Ali Moghtaderi

Ali Moghtaderi

The George Washington University

Steven Farmer

George Washington University - School of Medicine and Health Sciences

Bernard S. Black

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

Date Written: August 1, 2016

Abstract

Appendix is available at: https://ssrn.com/abstract=2845391

Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies, using a difference-in-differences (DiD) approach, find lower Medicare spending for hospital care after states adopt caps on non-economic damages (“damage caps”), during the “second” reform wave of the mid-1980s. One recent paper finds higher Part B Medicare spending following “third wave” caps adopted in the 2000s, but has only aggregate county-level spending data. We re-examine this issue using patient-level data. We find, with patient and zip code fixed effects and extensive patient level covariates that cardiac testing rates and cardiac interventions (catheterization, stenting, and bypass surgery). don’t change after damage cap adoptions; not much happens to Medicare part A and part B spending, and if anything, total Medicare spending rises.

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

JEL Classification: I11, I18, K23, K32

Suggested Citation

Moghtaderi, Ali and Farmer, Steven and Black, Bernard S., Damage Caps and Defensive Medicine: Reexamination with Patient Level Data (August 1, 2016). Available at SSRN: https://ssrn.com/abstract=2816969

Ali Moghtaderi (Contact Author)

The George Washington University ( email )

950 New Hampshire Ave NW
Suite 609
Washington, DC 20052
United States

Steven Farmer

George Washington University - School of Medicine and Health Sciences ( email )

3200m St NW
Washington, DC 20037
United States

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

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