Tort Reform and the Demand for Medical Care: Evidence from State-by-State Variation in Non-Economic Damages Caps

Posted: 25 Sep 2006 Last revised: 6 Sep 2012

Date Written: February 22, 2010

Abstract

Previous literature indicates that non-economic damages caps increase the number of physicians but finds no significant effect on health. A potential explanation is that, by reducing the cost of malpractice, caps affect physicians’ incentives to provide high quality care, an important determinant of the demand of medical care. Using county level panel data this paper finds that caps adoption leads to a 4 percents decrease in surgeries, a 2 percent decrease in hospital admissions but has no significant effect on emergency care, outpatient visits, birth rates, or prenatal care conditional on births. However, there is evidence of significant heterogeneity in the magnitude of the response. First time births decrease as a proportion of total births, and I find indications of significant variation by type of surgery. There is also evidence of increase use of physicians located across the border. Taken together these results provide suggestive evidence of a decrease in demand leading to a net negative effect on utilization rates.

Keywords: Malpractice, Non-economic damages, Patients, Medical Care Delivered

JEL Classification: I11, I12, I18, K13, K32, D00

Suggested Citation

Cotet Grecu, Anca, Tort Reform and the Demand for Medical Care: Evidence from State-by-State Variation in Non-Economic Damages Caps (February 22, 2010). Available at SSRN: https://ssrn.com/abstract=932207 or http://dx.doi.org/10.2139/ssrn.932207

Anca Cotet Grecu (Contact Author)

Seton Hall University ( email )

400 S Orange Avenue
South Orange, NJ 07079
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
820
PlumX Metrics