Medical Malpractice Reform and Employer‐Sponsored Health Insurance Premiums

Abstract

Objective. Tort reform may affect health insurance premiums both by reducing medical malpractice premiums and by reducing the extent of defensive medicine. The objective of this study is to estimate the effects of noneconomic damage caps on the premiums for employer‐sponsored health insurance. Data Sources/Study Setting. Employer premium data and plan/establishment characteristics were obtained from the 1999 through 2004 Kaiser/HRET Employer Health Insurance Surveys. Damage caps were obtained and dated based on state annotated codes, statutes, and judicial decisions. Study Design. Fixed effects regression models were run to estimate the effects of the size of inflation‐adjusted damage caps on the weighted average single premiums. Data Collection/Extraction Methods. State tort reform laws were identified using Westlaw, LEXIS, and statutory compilations. Legislative repeal and amendment of statutes and court decisions resulting in the overturning or repealing state statutes were also identified using LEXIS. Principal Findings. Using a variety of empirical specifications, there was no statistically significant evidence that noneconomic damage caps exerted any meaningful influence on the cost of employer‐sponsored health insurance. Conclusions. The findings suggest that tort reforms have not translated into insurance savings.

HOW DOES TORT LAW AFFECT CONSUMER AUTO INSURANCE COSTS?

“…Earlier work that looked at effects of reform generally examined liability lines other than auto (Viscusi et al, 1993;Hunter and Doroshow, 2002). Much of the scholarly debate over tort reform in recent years has focused on outcomes related to the health care system, including patient safety (Currie and Macleod, 2008), physician supply (Klick and Stratmann, 2007;Matsa, 2007;Helland and Showalter, 2009;Hyman et al, 2012), malpractice premiums (Grace and Leverty, 2013), treatment cost McClellan, 1996, 2002;Sloan and Shadle, 2009), and consumer health insurance premiums (Morrisey, Kilgore, & Nelson 2008;Avraham, Dafny, & Schanzenbach 2012). Other recent work attempts to assess the effects of the tort law environment on general economic performance (Cross, 2011;Shepherd, 2013).…”

Hidden Costs? Malpractice Allegations and Defensive Medicine Among Cardiac Surgeons

“…Although tort law, in theory, should incent the provision of the appropriate standard of healthcare, many healthcare professionals and policymakers believe that the tort system instead induces the over-provision of care. Specifically, recent scholarship has uncovered strong empirical evidence that the over-provision of care at the intensive margin and under-provision at the extensive margin may be unintended and costly consequences of tort law (Shavell, 1984;Kessler & McClellan, 1996, 1997Morrisey et al, 2008).…”

“…Such 'defensive medicine', on the part of rational providers can be explained by uncertainty in the process of assigning costs to individual providers (Morrisey et al, 2008). Anecdotal and empirical evidence exists that the medical negligence system operates poorly (Cranberg et al 2007), contributing to such uncertainty (although many find that malpractice judgments accurately reflect malpractice (Studdert et al 2006)).…”

Caps on noneconomic damages’ effect on the number of paid malpractice claims in various American states

“…Tort reform has been proposed as a means of lowering its growth. [1][2][3][4][5] Proponents believe that this will lower costs in two ways: (1) by lowering malpractice premiums [6] and (2) by decreasing defensive medicine. [7] The former concept infers that the high costs of insuring against malpractice lead to physicians transferring those costs to patients and insurers.…”