Tort Reform Increasing Physician Supply is a Myth

5/20/2015

Welcome to the last segment of “What a Waste Wednesday: the Tort Reform Edition! Today, we wrap up the issue with a look at the impact that tort reform was supposed to have on physician availability. Simply put, tort reform increasing physician supply is a myth.

The intent was for tort reform and non-economic damages caps to lower malpractice insurance rates, curb “excessive” filing of lawsuits and attract doctors (in droves) to tort reform states. We already know that insurance rates didn’t fall and that there weren’t that many suits being filed anyway, not to mention that tort reform didn’t cause appreciable reductions in that amount. Well, it didn’t really impact physician supply either.

Studies are conflicting (of course), with one side saying tort reform had zero impact on physician supply and the other saying that there was a very small impact. The naysayers’ study, conducted in 2007 and 2008 by David A. Matsa and Y. Tony Yang respectively, showed that tort reform in general and non-economic damages caps in particular had absolutely no impact on the number of doctors in a given state.

Jonathan Klick and Thomas Stratman conducted a study that analyzed American Medical Association data on where doctors practice. Their results showed that physician supply increased by 4% in states with non-economic damages caps. Only 4%. A different study in 2003 by Hellinger and Encinosa showed a possible increase of 12%. The Klick/Stratman study was done in 2007, four years after Hellinger/Encinosa’s study.

Just to make sure we’re on the same page, let’s compare the goals of tort reform to the results.

Goals                                                            Results

Lower medmal insurance rates            No appreciable decrease in rates

Reduction in lawsuits                                    Lawsuit filing rates fell

Elimination of “jackpot justice”            Injured people couldn’t find lawyers

Increase physician supply                        No appreciable increase in supply

In other words, the only thing that really happened was insurance companies saved money. The caps lowered the pay-outs to those suits that actually did make it to court and many deserving injured people were turned away from the justice system by the unreasonable filing requirements found under tort reform or the simple lack of attorneys willing to take such cases due to fee caps. The “altruistic” reason behind tort reform – lowering rates for doctors – ended up being a smoke screen to keep money in the hands of the insurance companies.

Thank you for tagging along on this four-part journey. I hope you’ll now see tort “reform” for what it really is: a political playing card for the candidates who push it and a way to make insurance companies richer.

Source:

AN OVERREACTION TO A NONEXISTENT PROBLEM: EMPIRICAL ANALYSIS OF TORT REFORM FROM THE 1980S TO 2000S