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Medicaid expansion, tort reforms, and medical liability costs

Jingshu Luo, Hua Chen and Martin Grace

Journal of Risk & Insurance, 2022, vol. 89, issue 3, 789-821

Abstract: This paper examines the impacts of the Affordable Care Act (ACA)'s Medicaid expansion and tort reforms on the medical liability system. Medicaid expansion increased the demand for medical services, but in doing so it may also increase physicians' medical liability. By studying malpractice costs to insurers, medical practitioners, and hospitals in the United States in 2010–2018, we find insurers in Medicaid expansion states experienced higher medical liability costs than those in nonexpansion states. Medical practitioners paid higher premiums in expansion states but the premium increase was not enough to fully offset rising costs. In addition, we do not find that tort reforms mitigated ACA‐induced malpractice liability costs. We show this is because Medicaid expansion increased malpractice costs mainly by increasing claim frequency while tort reforms generally reduce claim severity. We also find little evidence that hospitals paid higher malpractice insurance premiums to insurers or self‐insurance programs, or incurred higher out‐of‐pocket medical liability losses after Medicaid expansion.

Date: 2022
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Handle: RePEc:bla:jrinsu:v:89:y:2022:i:3:p:789-821