Defensive Medicine: Evidence from Military Immunity

Abstract

We estimate the extent of defensive medicine by physicians, embracing the no-liability counterfactual made possible by the structure of liability rules in the Military Heath System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care, while protections are provided to dependents treated at military facilities and to all patients—active-duty or not—that receive care from civilian facilities. Drawing on this variation and exploiting exogenous shocks to care location choices stemming from base-hospital closures, we find suggestive evidence that liability immunity reduces inpatient spending by 5% with no measurable negative effect on patient outcomes.

Defensive Medicine and Obstetric Practices: Evidence from the Military Health System

“…ACTIVE_DUTY is a dummy variable for whether the individual is active‐duty at the time of the delivery; ON‐BASE is a dummy variable for whether the delivery occurs at a base hospital; X is a set of individual‐episode‐specific controls (age dummies, year dummies, pay‐grade‐level dummies, Charlson comorbidity scores for the patient at the time of the delivery, and indicator variables for the incidence of the following nonpreventable delivery complications: previous cesarean delivery, multiple births, breech presentation, cephalo‐pelvic disproportion, placenta previa, abruptio placentae, and cord prolapse) . One of the advantages of investigating a specific clinical context such as childbirth—relative to the broad‐based inpatient inquiry in Frakes and Gruber ()—is the ability to control for risk factors of this nature that are more specifically tailored to the precise clinical context, thereby enhancing the ability to ensure comparability between those patients in the relevant treatment and control groups…”

“…Rather, as we discuss below, the key effect of these closings is to change where mothers receive their deliveries—on the base versus off. Moreover, even if the BRAC events do cause some change in patient residence choice, Frakes and Gruber () demonstrate that there is no change in the compositional health mix of the active‐duty relative to the non‐active‐duty who continue to live near the base following the BRAC event.…”

“…The final concern we face is that the relationship that we identify—the differential treatment of active‐duty patients versus non‐active‐duty patients on the base versus off—reflects more than just differences in the availability of liability recourse, a concern that is not fully ameliorated by the base closure and mother fixed effects approaches. Frakes and Gruber () discuss several possible threats of this nature—for example, (1) perhaps the Department of Defense places pressure on MTFs to treat active‐duty patients nonintensively in order to encourage their more immediate return to work or (2) perhaps active‐duty patients themselves are reluctant to appear weak in front of their own—that is, military providers—and may thus refuse recommended interventions…”

“…In more specific terms, to capture a liability‐immunity treatment effect, we follow Frakes and Gruber ()—which had embraced this approach on the full inpatient sample—and estimate a difference‐in‐difference design in which we compare the care received by active‐duty versus non‐active‐duty mothers delivering on the base versus off the base. To address endogeneity in the choice of on‐base versus off‐base care while estimating this difference‐in‐difference design, we draw on exogenous shifts in access to MHS bases during our sample period due to military hospital closings pursuant to recommendations by the Base Realignment and Closure Commission.…”

“…In Section IV, we provide additional detail regarding how we compare the care provided to beneficiaries in the treatment and control groups in order to illuminate the effects of immunity from liability, following Frakes and Gruber (). We note at the outset, however, that we also expand on Frakes and Gruber () in the present analysis by estimating specifications with mother fixed effects, such that we do not simply make comparisons across individuals falling into these treatment and control categories, but also compare the care provided within the same individual over time as they fall into both the treatment and control groups at different points…”