Impact of State Tort Reforms on Utilization

Jackson Williams

Tort Reform

• In early part of past decade, prices of medical liability insurance spiked.

• AMA declared that certain states were experiencing “crises” where patients were losing access to doctors.

• Doctors’ lobbying campaigns for tort reforms were bolstered by promises of cost savings from reductions in “defensive medicine.”

• Ten states capped damages between 2002-2005.

Putative Benefits of Tort Reform

• Increased Access– As doctors get to keep more money, they will work

harder, invest in their practices– Prediction: More doctors, working more hours

• Decreased Defensive Medicine– With less overall liability exposure, doctors should

have less fear of lawsuits over missed diagnosis– Prediction: Decreased utilization for testing

A Simple View of Tort Reform’s Predicted Effects

What Are the Dependent Variables?

• Investigators studying the Access Thesis have usually used number of doctors per state.

• Investigators studying the Defensive Medicine Thesis have usually used utilization data.

• However, as GAO noted, utilization is also expected to be higher as access increases.

• In other words, Access Thesis implies higher utilization even as Defensive Medicine Thesis predicts lower utilization.

Graphing Defensive Medicine:Assume No Payment Incentives

Graphing Defensive Medicine:Assume No Payment Incentives

Graphing Defensive Medicine:Payment Incentivizes Stinting

Difference-in-Differences AnalysisGrowth in Diagnostic, Lab & X-Ray 2000-2007

Difference-in-Differences AnalysisGrowth in Diagnostic, Lab & X-Ray 2000-2007

Eisenberg: Physician’s Three Main Motivations

• The physician as the patient’s agent: Physician performs clinical services in the interest of, or demanded by, the patient.

• The physician as guarantor of social good: Physician strives for efficiency and protection of the public.

• The physician as self-interested practitioner: Physician seeks target income, pursues practice style convenient to him/her.

More Realistic View of Volume and Intensity in Past Decade?

Questions Raised By Findings

• Why haven’t policymakers and researchers more fully thought through (or articulated) these contradictions?

• Was there endogeneity involved in Tort Reform States’ growth?

• If there is true defensive medicine affecting utilization, what is the correct policy response?