Patient Welfare under the Legal Standard of Care

Olbrich Anja ()
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Olbrich Anja: Institute of Social Medicine and Health Economics, Otto-von-Guericke University

The B.E. Journal of Economic Analysis & Policy, 2008, vol. 8, issue 2, 19

Abstract: Presuming that the standard of care reflected in the physician reimbursement scheme harms patients, German and US courts enforce their traditional legal standard of care in malpractice lawsuits. This paper summarizes the literature, evaluates the legal standard in microeconomic terms and determines the insurers' and courts' impact on patient welfare. The legal standard proves to be inefficiently high. By contrast, patient welfare is maximized when insurers apply a two-part reimbursement scheme that induces physicians not to comply with the legal standard. If this is infeasible, another reimbursement scheme is suggested.

Keywords: medical malpractice; negligence rule; supply-side cost sharing; hand rule (search for similar items in EconPapers)
Date: 2008
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DOI: 10.2202/1935-1682.1827

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