The Effects of Malpractice Tort Reform on Defensive Medicine

As the rising cost of malpractice threatens to reduce the number of hospitals and physicians in various states across the nation, policy-makers must examine the factors contributing to these crises. Beyond studying the symptoms of malpractice crises, such as increasing claims frequency and severity manifested through increasing malpractice premia, policy-makers must consider flaws within the malpractice litigation system itself. In addition to structural and administrative issues, policy-makers must also consider physicians’ responses to changing malpractice environments; they must consider how malpractice tort laws influence the practice of defensive medicine. Since the early 1970’s economists, lawyers, and those within the medical community have debated the existence of defensive medicine. As defined by the U. S. Congress Office of Technology Assessment (OTA) in its 1994 report on defensive medicine, positive defensive medicine occurs when physicians order additional tests or procedures primarily to avoid malpractice liability; the term “positive “ refers to additional health care utilization. Negative defensive medicine occurs when doctors avoid certain patients or treatments chiefly out of concern for malpractice liability; here “negative” refers to a reduction in health care utilization (U. S. Congress 1994). While recent economic analyses support the idea that physicians practice defensive medicine, complexities surrounding the topic have prevented economists from discerning its pervasiveness and direct contribution to healthcare costs. Given the role defensive medicine plays in healthcare and the scarcity of studies that link it to the malpractice environment, this study seeks to provide direct evidence of defensive medicine by comparing health care expenditures between states with different malpractice environments. The scope of this healthcare utilization study has been limited to positive defensive medicine, which if it exists, directly increases total healthcare expenditures.