Losers and losers: Some demographics of medical malpractice tort reforms
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Losers and losers: Some demographics of medical malpractice tort reforms Andrew I. Friedson & Thomas J. Kniesner
Published online: 21 September 2012 # Springer Science+Business Media New York 2012
Abstract Our research examines how recent reforms have affected a key aspect of patients’ implicit insurance present in medical malpractice torts. Specifically, we estimate how non-economic damages caps affected pre-trial settlement speed and settlement amounts. Maximum entropy (most likely) quantile regressions emphasize that the post-reform settlement effects most informative for policy evaluation differ greatly from OLS (mean) estimates and clarify the conclusion emerging. In particular, the effect of the tort reform here can best be thought of as a 25% tax on the asset value of settlements that exempts settlements involving infants. The social welfare effects of tort reform are less clear than the asset reduction effects due to likely health state dependent utility. Keywords Medical malpractice . Tort reform . Texas closed claims . Damage caps . Quantile regression . Maximum entropy JEL classification C21 . I18 . K13 We thank Mary Santy for help with manuscript preparation, the editor and an anonymous referee for helpful comments on our research, and Jim Ziliak and Antonio Galvao Jr. for programming help with the maximum entropy quantile regression model. A. I. Friedson Department of Economics, University of Colorado Denver, Denver, CO 80217, USA T. J. Kniesner Center for Policy Research and Department of Economics, Syracuse University, Syracuse, NY 132441020, USA T. J. Kniesner Department of Economics, Claremont Graduate University, Claremont, CA 91711, USA T. J. Kniesner IZA, Bonn, Germany T. J. Kniesner (*) Maxwell School of Syracuse University, Syracuse, NY 13244-1020, USA e-mail: [email protected]
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J Risk Uncertain (2012) 45:115–133
The medical malpractice tort system in the United States compensates injured patients to offset economic damages from lost wages and psychic costs of pain and suffering. A purchase of health care can be thought of as including a socalled medical lottery ticket that pays off if the patient is injured and can demonstrate that the injury resulted from the physician’s negligence (Calabresi 1961; Zeckhauser and Nichols 1978). Tort law in turn creates an implicit insurance policy for patients because their right to sue acts as insurance against the likelihood of a negligent injury when a patient consumes medical services. Our research examines empirically an under-appreciated dimension of the medical malpractice tort system, which is how tort reforms have created interpersonal differences in patients’ economic well-being subsequent to medical injuries.1 In particular, we use closed claims from the state of Texas to examine econometrically how a reform package impacts people seeking recompense under their implicit insurance—specifically people who have been negligently injured and are trying to get quick compensation. The specific reform package of interest was part of the Texa
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