Japanese patients file relatively few medical malpractice claims. Most scholars try to explain this phenomenon by identifying ''faults'' in the Japanese judicial system. Largely, the faults they identify do not exist. Instead, a substantial part of the reason for the malpractice claiming patterns may lie in the national health insurance system. In order to contain the cost of this system, the government suppresses the price it pays for the technologically most sophisticated procedures. Predictably as a result, Japanese doctors have focused instead on more rudimentary care. Yet, for reasons common to many societies, Japanese patients are less apt to sue over rudimentary care. They are more likely to sue over sophisticated care. In part, Japanese patients may bring relatively few malpractice suits because the government has (for reasons of cost) suppressed the volume of the services (namely, highly sophisticated services) that would otherwise generate the most malpractice claims. I explore this issue with a dataset covering all malpractice suits that generated a published district court opinion from 1995 to 2004. Potentially, universal health insurance programs do not just alter the supply and distribution of medical services; potentially, they also shape claiming and litigating behavior in malpractice disputes. After all, the programs reduce the direct cost of medical services to patients. The lower costs boost demand, and-to prevent the drain on the public fisc-the government could (and usually does) respond by suppressing the amounts it pays suppliers. By cutting the price it pays suppliers, a universal insurance program alters both the quality and the mix of medical services sold. Facing statemandated prices below market-clearing levels, suppliers will cut the quality of the services they provide. But because the program also changes the relative prices of the various medical services, suppliers will shift the mix of services they sell as well. They will offer relatively more of those services commanding the higher mandated prices. They will offer less of those commanding the lower prices.
3For malpractice claiming patterns, these changes create potentially cross-cutting effects. On the one hand, all else held equal, as the suppressed prices induce sellers to degrade quality, malpractice claims should rise. On the other hand, as sellers change the mix of services they offer in response to the new price structure, they might-plausibly-shift the mix away from those services that generate the most malpractice claims.
4Consider the logic (explained in more detail below). To suppress the potentially exploding costs of its insurance program, suppose a legislature cuts the relative price it pays for the more sophisticated (and expensive) services. Technologically intensive, physically invasive, implemented by a team of medical specialists, and targeted toward high-risk patients, these services often cause more observably adverse events than ordinary primary care. They also generate the most legally cognizable...