Turning from Damage Caps to Information Disclosure: An Alternative to Tort Reform
15 Pages Posted: 23 Jan 2005
Medical malpractice damage caps are among the most popular instruments of tort reform at the state level. Recently the Bush administration proposed a federal damage cap on non-economic damages to quell the rise of medical malpractice insurance premiums despite the paucity of empirical evidence demonstrating that damage caps actually decrease premiums. This Case Study argues that imposing statutory caps on medical malpractice damages is not an effective method of remedying the medical malpractice insurance crisis: therefore, policymakers should consider alternatives to damage caps. In particular, evidence suggests that implementing mandatory disclosure of the contract terms between managed care organizations and physicians for the provision of services to enrollees reduces medical malpractice insurance premiums. Policymakers interested in reducing premiums should consider implementing MCO-physician contract disclosure requirements as a means to their desired end.
Keywords: Damage caps, medical malpractice, tort reform
JEL Classification: D80, I18
Suggested Citation: Suggested Citation