The Impact of Tort Reform on Employer-Sponsored Health Insurance Premiums

Ronen Avraham, Leemore S. Dafny and Max M. Schanzenbach

No 15371, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We evaluate the effect of tort reform on employer-sponsored health insurance premiums by exploiting state-level variation in the timing of reforms. Using a dataset of healthplans representing over 10 million Americans annually between 1998 and 2006, we find that caps on non-economic damages, collateral source reform, and joint and several liability reform reduce premiums by 1 to 2 percent each. These reductions are concentrated in PPOs rather than HMOs, suggesting that can HMOs can reduce "defensive" healthcare costs even absent tort reform. The results are the first direct evidence that tort reform reduces healthcare costs in aggregate; prior research has focused on particular medical conditions.

JEL-codes: H51 I18 K13 (search for similar items in EconPapers)
Date: 2009-09
New Economics Papers: this item is included in nep-ias
Note: EH LE
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Citations: View citations in EconPapers (6)

Published as “The Impact of Tort Reform on Employer-Sponsored Health Insurance Premiums,” with Ronen Avraham and Max Schanzenbach, Journal of Law, Economics, and Organizations, October 2012, 28(4).

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