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Damage caps and defensive medicine, revisited

Myungho Paik, Bernard Black and David A. Hyman

Journal of Health Economics, 2017, vol. 51, issue C, 84-97

Abstract: Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies, using a difference-in-differences (DiD) approach, find lower Medicare spending for hospital care after states adopt caps on non-economic or total damages (“damage caps”), during the “second” reform wave of the mid-1980s. We re-examine this issue in several ways. We study the nine states that adopted caps during the “third reform wave,” from 2002 to 2005. We find that damage caps have no significant impact on Medicare Part A spending, but predict roughly 4% higher Medicare Part B spending. We then revisit the 1980s caps, and find no evidence of a post-adoption drop (or rise) in spending for these caps.

Keywords: Medical malpractice; Tort reform; Defensive medicine; MEDICARE; Healthcare spending (search for similar items in EconPapers)
JEL-codes: I11 I18 K23 K32 (search for similar items in EconPapers)
Date: 2017
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