title: Damage caps and defensive medicine, revisited.
abstract: 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 or total damages ("damage caps"), during the "second" reform wave of the mid-1980s. We re-examine this issue in several ways. We study the nine states that adopted caps during the "third reform wave," from 2002 to 2005. We find that damage caps have no significant impact on Medicare Part A spending, but predict roughly 4% higher Medicare Part B spending. We then revisit the 1980s caps, and find no evidence of a post-adoption drop (or rise) in spending for these caps.
authors.affiliation: Department of Policy Studies, Hanyang University, Republic of Korea.
authors.forename: Myungho
authors.initials: M
authors.lastname: Paik
authors.affiliation: Pritzker School of Law, Institute for Policy Research, and Kellogg School of Management, Northwestern University, USA. Electronic address: bblack@northwestern.edu.
authors.forename: Bernard
authors.initials: B
authors.lastname: Black
authors.affiliation: Georgetown University Law Center, USA.
authors.forename: David A
authors.initials: DA
authors.lastname: Hyman
mesh_terms: D003675:Defensive Medicine / Q000191:economics* / Q000458:organization & administration; D005102:Health Expenditures / Q000706:statistics & numerical data; D006801:Humans; D016365:Liability, Legal / Q000191:economics; D008318:Malpractice / Q000191:economics / Q000331:legislation & jurisprudence*; D016344:Medicare Part A / Q000191:economics / Q000706:statistics & numerical data; D016345:Medicare Part B / Q000191:economics / Q000706:statistics & numerical data; D014481:United States
keywords: Defensive medicine; Healthcare spending; MEDICARE; Medical malpractice; Tort reform