New Study Reveals Medical Malpractice Lawsuit Award Caps Do Not Lower Cost of Health Care

Proponents of limiting medical malpractice lawsuit compensation typically assert that such limitations will reduce the cost of health care and improve patients’ access to medical care. A recent study in Texas indicates that there is no merit to either claim.

In 2003, Proposition 12 was enacted in Texas that placed caps on medical malpractice lawsuit awards and made it more difficult for patients to sue hospitals. According to backers of the legislation, doctors in the state practiced “defensive medicine” – performing more tests and providing more care than what was needed -because they feared lawsuits. So, the reasoning went, once tort reform was enacted “unnecessary” services would be cut and the cost of health care would be reduced.

No Decrease in Health Care Costs Following Texas Tort Reform

However, a new study, titled “Does Tort Reform Affect Physician Supply? Evidence from Texas,” examined Texas Medicare spending between 2002 and 2009 and found that health care costs for seniors did not go down following the state’s limitations on patients’ rights. In fact, Medicare payments to Texas doctors increased about 1 to 2 percent faster than the rest of the country during that time. Researchers looked at Texas counties in which doctors faced a higher risk of lawsuits and those counties with a lesser risk. They found that physicians in higher-risk counties actually performed slightly more procedures than they had prior to the lawsuit caps.

No Increase in Health Care Access Following Texas Tort Reform

Additionally, proponents argued the limit on damage awards would attract more doctors to Texas, thereby increasing medical care access to its residents. But Texas saw its number of direct-patient-care doctors grow more slowly after the legislation than it did before, according to the study. Researchers found that there was neither a mass exodus of physicians leaving Texas prior to the legislation nor any dramatic influx of doctors after it was enacted. The study says, “Physician supply was not measurably stunted prior to reform, and did not measurably improve after reform. This is true whether one looks at all patient care physicians in Texas or at high-malpractice-risk specialties.”