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The effects of malpractice non-economic damage caps on the supply of physician labor: Heterogeneity by physician age and risk

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  • Pesko, Michael F.
  • Cea, Meagan
  • Mendelsohn, Jayme
  • Bishop, Tara F.

Abstract

We explore the impact of malpractice caps on non-economic damages that were enacted between 2003 and 2006 on the supply of physician labor, separately for high-malpractice risk and low-malpractice risk physician specialty types, and separately by young and old physicians. We use physician data from the Area Resource File for 2000–2011 and malpractice policy data from the Database of State Tort Law Reforms. We study the impact of these caps using a reverse natural experiment, comparing physician supply in nine states enacting new caps to physician supply in ten states that had malpractice caps in place throughout the full time period. We use an event study to evaluate changes in physician labor compared to the prior year. We find evidence that non-economic damage caps increased the supply of high-risk physicians <35years of age by 0.93 physicians per 100,000 people in the year after the caps were enacted. Non-economic damage caps were cumulatively associated with an increase of 2.1 high-risk physicians <35years of age per 100,000 people. Stronger non-economic damage caps generally had a larger impact on physical supply.

Suggested Citation

  • Pesko, Michael F. & Cea, Meagan & Mendelsohn, Jayme & Bishop, Tara F., 2017. "The effects of malpractice non-economic damage caps on the supply of physician labor: Heterogeneity by physician age and risk," International Review of Law and Economics, Elsevier, vol. 50(C), pages 7-14.
  • Handle: RePEc:eee:irlaec:v:50:y:2017:i:c:p:7-14
    DOI: 10.1016/j.irle.2017.03.002
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    References listed on IDEAS

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    1. Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc.
    2. Mello, Michelle M. & Hemenway, David, 2004. "Medical malpractice as an epidemiological problem," Social Science & Medicine, Elsevier, vol. 59(1), pages 39-46, July.
    3. Daniel Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 353-390.
    4. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-641, June.
    5. Katherine Baicker & Amitabh Chandra, 2005. "The Effect of Malpractice Liability on the Delivery of Health Care," NBER Chapters, in: Frontiers in Health Policy Research, Volume 8, National Bureau of Economic Research, Inc.
    6. Helland, Eric & Seabury, Seth A., 2015. "Tort reform and physician labor supply: A review of the evidence," International Review of Law and Economics, Elsevier, vol. 42(C), pages 192-202.
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    Keywords

    Malpractice; Physician labor supply;

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