`Defensive medicine' is a potentially serious social problem: if fear of liability drives health care providers to administer treatments that do not have worthwhile medical benefits, then the current liability system may generate inefficiencies many times greater than the costs of compensating malpractice claimants. To obtain direct empirical evidence on this question, we analyze the effects of malpractice liability reforms using data on all elderly Medicare beneficiaries treated for serious heart disease in 1984, 1987, and 1990. We find that malpractice reforms that directly reduce provider liability pressure lead to reductions of 5 to 9 percent in medical expenditures without substantial effects on mortality or medical complications. We conclude that liability reforms can reduce defensive medical practices.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
5466.
Length: Date of creation: Feb 1996 Date of revision: Publication status: published as Kessler, Daniel and Mark McClellan. "Do Doctors Practice Defense Medicine?," Quarterly Journal of Economics, 1996, v111(2,May), 353-390. Towards a More Effective Monetary Policy, Kuroda, Twao, ed.,: Macmillan, 1997, pp. 137-164. Handle: RePEc:nbr:nberwo:5466
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Find related papers by JEL classification: I1 - Health, Education, and Welfare - - Health K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability
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