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Posted: April 29th, 2018
Effect of Medical Liability Reform on Healthcare Utilization and Spending
Effect of Medical Liability Reform on Healthcare Utilization and Spending
Medical liability reform is a topic of ongoing debate in the US, as policymakers seek to balance the goals of ensuring patient safety, compensating victims of medical errors, and reducing the costs of healthcare. One of the main arguments in favor of medical liability reform is that it would reduce the practice of defensive medicine, which refers to the provision of unnecessary or excessive tests and procedures by physicians to avoid potential malpractice lawsuits. Defensive medicine is estimated to account for a significant portion of healthcare spending in the US, ranging from 2.4% to 9% according to different studies [1][2]. However, the evidence on the effect of medical liability reform on healthcare utilization and spending is mixed and inconclusive.
One of the most common types of medical liability reform is the imposition of caps on noneconomic damages, which are awards for pain and suffering that are not directly related to medical expenses or lost income. According to the American Medical Association, 30 states have enacted some form of caps on noneconomic damages as of 2023 [3]. However, the impact of these caps on healthcare utilization and spending is unclear. Some studies have found that caps reduce healthcare spending by lowering malpractice premiums, reducing defensive medicine, and increasing competition among providers [4][5]. Other studies have found that caps have no effect or even increase healthcare spending by increasing the volume or intensity of services, reducing quality of care, and decreasing access to care for low-income or high-risk patients [6][7].
Another type of medical liability reform is the development of safe harbors, which are guidelines or standards that protect physicians from malpractice claims if they follow evidence-based practices. The idea behind safe harbors is to encourage physicians and patients to avoid wasteful tests and procedures that have limited benefits relative to their costs. For example, the Choosing Wisely initiative, led by the American Board of Internal Medicine Foundation, provides recommendations for various clinical scenarios based on the best available evidence [8]. However, safe harbors are not widely adopted or implemented in the US, and their effect on healthcare utilization and spending is uncertain. Some studies have suggested that safe harbors could reduce healthcare spending by 5% to 34%, depending on the scope and design of the guidelines [9][10]. Other studies have argued that safe harbors could increase healthcare spending by creating a floor rather than a ceiling for care, creating legal uncertainty, and increasing administrative costs [11][12].
In conclusion, medical liability reform is a complex and controversial issue that has implications for healthcare utilization and spending. The effect of different types of reform depends on various factors, such as the legal environment, the market structure, the provider behavior, and the patient preferences. Therefore, more research is needed to evaluate the impact of medical liability reform on healthcare outcomes and costs, as well as to identify the optimal design and implementation of reform measures.
References:
[1] Mello MM, Chandra A, Gawande AA, Studdert DM. National costs of the medical liability system. Health Aff (Millwood). 2010 Sep;29(9):1569-77. doi: 10.1377/hlthaff.2009.0807.
[2] Kessler DP, McClellan MB. Do doctors practice defensive medicine? Q J Econ. 1996 May;111(2):353-90. doi: 10.2307/2946682.
[3] American Medical Association. Medical Liability Reform Now! The facts you need to know to address the broken medical liability system. 2023. Available from: https://www.ama-assn.org/system/files/mlr-now.pdf
[4] Lakdawalla DN, Seabury SA. The welfare effects of medical malpractice liability. Int Rev Law Econ. 2009 Dec;29(4):316-27. doi: 10.1016/j.irle.2009.09.001.
[5] Klick J, Stratmann T. Medical malpractice reform and physicians in high-risk specialties. J Legal Stud. 2007 Jan;36(S2):S121-S142. doi: 10.1086/509662.
[6] Currie J, MacLeod WB. First do no harm? Tort reform and birth outcomes. Q J Econ. 2008 May;123(2):795-830. doi: 10.1162/qjec.2008.123.2.795.
[7] Matsa DA. Does malpractice liability keep the doctor away? Evidence from tort reform damage caps.
J Legal Stud.
2017 Jan;46(1):143-82.
doi: 10
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