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Evaluating the Medical Malpractice System and Options for Reform

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  • Daniel P. Kessler
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    Abstract

    The U.S. medical malpractice liability system has two principal objectives: to compensate patients who are injured through the negligence of healthcare providers and to deter providers from practicing negligently. In practice, however, the system is slow and costly to administer. It both fails to compensate patients who have suffered from bad medical care and compensates those who haven't. According to opinion surveys of physicians, the system creates incentives to undertake cost-ineffective treatments based on fear of legal liability—to practice "defensive medicine." The failures of the liability system and the high cost of health care in the United States have led to an important debate over tort policy. How well does malpractice law achieve its intended goals? How large of a problem is defensive medicine and can reforms to malpractice law reduce its impact on healthcare spending? The flaws of the existing system have led a number of states to change their laws in a way that would reduce malpractice liability—to adopt "tort reforms." Evidence from several studies suggests that wisely chosen reforms have the potential to reduce healthcare spending significantly with no adverse impact on patient health outcomes.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.2.93
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    Bibliographic Info

    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 25 (2011)
    Issue (Month): 2 (Spring)
    Pages: 93-110

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    Handle: RePEc:aea:jecper:v:25:y:2011:i:2:p:93-110

    Note: DOI: 10.1257/jep.25.2.93
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    1. Janet Currie & W. Bentley MacLeod, 2006. "First Do No Harm?: Tort Reform and Birth Outcomes," NBER Working Papers 12478, National Bureau of Economic Research, Inc.
    2. Sloan, Frank A. & Shadle, John H., 2009. "Is there empirical evidence for "Defensive Medicine"? A reassessment," Journal of Health Economics, Elsevier, vol. 28(2), pages 481-491, March.
    3. Beomsoo Kim, 2007. "The Impact of Malpractice Risk on the Use of Obstetrics Procedures," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages S79-S119, 06.
    4. Frank A. Sloan & Lindsey M. Chepke, 2008. "Medical Malpractice," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262195720, December.
    5. Henry S. Farber & Michelle J. White, 1991. "Medical Malpractice: An Empirical Examination of the Litigation Process," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 199-217, Summer.
    6. Kessler, Daniel P. & McClellan, Mark B., 2002. "How liability law affects medical productivity," Journal of Health Economics, Elsevier, vol. 21(6), pages 931-955, November.
    7. Jonathan Klick & Thomas Stratmann, 2007. "Medical Malpractice Reform and Physicians in High-Risk Specialties," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages S121-S142, 06.
    8. Kessler, Daniel & McClellan, Mark, 2002. "Malpractice law and health care reform: optimal liability policy in an era of managed care," Journal of Public Economics, Elsevier, vol. 84(2), pages 175-197, May.
    9. Dubay, Lisa & Kaestner, Robert & Waidmann, Timothy, 2001. "Medical malpractice liability and its effect on prenatal care utilization and infant health," Journal of Health Economics, Elsevier, vol. 20(4), pages 591-611, July.
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    Cited by:
    1. Ian A. MacKenzie & Markus Ohndorf, 2013. "Caps on Coasean Transfers," Discussion Papers Series 485, School of Economics, University of Queensland, Australia.
    2. T. Renee Bowen & David M. Kreps & Andrzej Skrzypacz, 2013. "Rules with Discretion and Local Information," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1273-1320.
    3. Andrew Friedson & Thomas Kniesner, 2012. "Losers and losers: Some demographics of medical malpractice tort reforms," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 115-133, October.
    4. Sofia, AmaralGarcia & Veronica, Grembi, 2011. "Curb your premium! evaluating state intervention in medical malpractice insurance," MPRA Paper 32301, University Library of Munich, Germany.

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