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Curb your premium! evaluating state intervention in medical malpractice insurance

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  • Sofia, AmaralGarcia
  • Veronica, Grembi

Abstract

Using data of Italian public healthcare providers over years 2001 through 2008, we evaluate the impact of two policies adopted by Italian Regions (i.e., States) to cope with increasing medical malpractice costs using a Difference-in-Difference specification. We assess the impact of the policies on premiums paid and legal expenditures. The first policy consisted in collecting information and monitoring both compensation requests and any legal action related to a medical malpractice claim against a public healthcare provider. The second policy is a switch from private to public insurance for damages up to 500,000 euros combined with a centralized-regional contracting out in the private insurance market for damages in excess of 500,000 euros. Both policies represent attempts to cope with multiple agency problems within the public sector. Our results show that the impact of central monitoring in malpractice claims trend can reduce up to 29% the premiums paid for the treated providers, while the effect is obviously stronger for public insurance (41%). We control for the effects of the latter also on the trend of legal expenditures as proxy for common pool behaviors which do not result from our data. Validity tests show that our results are not driven by a decreasing trend affecting the insurance expenditures of the analyzed units before the policies’ introduction.

Suggested Citation

  • Sofia, AmaralGarcia & Veronica, Grembi, 2011. "Curb your premium! evaluating state intervention in medical malpractice insurance," MPRA Paper 32301, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:32301
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    File URL: https://mpra.ub.uni-muenchen.de/40718/3/MPRA_paper_40718.pdf
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    Cited by:

    1. Paola Bertoli & Veronica Grembi, 2018. "Medical Malpractice: How Legal Liability Affects Medical Decisions," Contributions to Economic Analysis, in: Health Econometrics, volume 127, pages 235-261, Emerald Group Publishing Limited.
    2. Sofia Amaral-Garcia & Paola Bertoli & Veronica Grembi, 2015. "Does Experience Rating Improve Obstetric Practices? Evidence From Geographical Discontinuities in Italy," CEIS Research Paper 342, Tor Vergata University, CEIS, revised 08 May 2015.
    3. Amaral-Garcia, S. & Bertoli, P. & Grembi, V., 2014. "Does Experience Rating Improve Obstetric Practices? Evidence From Geographical Discontinuities," Health, Econometrics and Data Group (HEDG) Working Papers 14/23, HEDG, c/o Department of Economics, University of York.
    4. Paola Bertoli & Veronica Grembi, 2017. "Exploring the Nexus between Certainty in Injury Compensation and Treatment Selection," CERGE-EI Working Papers wp603, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

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    More about this item

    Keywords

    Medical Errors; Medical Malpractice Premium; Legal Expenditures; Difference in Difference;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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