Is there empirical evidence for “Defensive Medicine”? A reassessment

Proponents of tort reform applied to medical malpractice argue for change partly on the premise that the threat of lawsuits has made medical care more costly. Using U.S. longitudinal data from the National Long-Term Care Survey merged with Medicare claims and other data for 1985-2000, this study assesses whether tort reforms have reduced Medicare payments made on behalf of beneficiaries and the survival probability following an index event. Direct reforms (caps on damages, abolition of punitive damages, eliminating mandatory prejudgment interest, and collateral source offset) did not significantly reduce payments for Medicare-covered services in any specification. Indirect reforms (limitations on contingency fees, mandatory periodic payments, joint-and-several liability reform, and patient compensation funds) significantly reduced Medicare payments only in a specification based on any hospitalization, but not in analysis of hospitalization for each of four common chronic conditions. Neither direct nor indirect reforms had a significant effect on the health outcomes, with one exception. The overall conclusion is that tort reforms do not significantly affect medical decisions, nor do they have a systematic effect on patient outcomes.