Do Medical Malpractice Costs Affect the Delivery of Health Care?

August 22, 2014
OROS Risk Solutions, LLC
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Rapidly rising medical malpractice premiums have become an issue of increasing concern for physicians. Between 2000 and 2002, premiums rose by an average of 15%. The rise in premiums fluctuates based on specialty and geographic areas. Premiums for general surgeons in one Florida County rose by 75 percent, to nearly $175,000 per year.

Some policy makers and interest groups have called for tort reform measures, such as caps on non-economic damages in malpractice suits, to limit the growth of premiums. The rise in malpractice premiums has the potential to affect the health care system as it may influence physicians’ decisions to join and/or leave the labor force, their choice of a medical specialty, the decision of where to locate, which creates the potential for underserved patient populations in certain specialties or geographic areas.

Rise in malpractice insurance may even encourage physicians to practice “defensive medicine,” performing more tests and procedures than necessary in order to reduce exposure to lawsuits. This causes an overuse of medical resources and increases health care costs. Both rising malpractice premiums and defensive medicine practices may contribute to the increase in health insurance premiums for patients. In return, if healthcare premiums are too high, less individuals will be able to afford it which leads to more underinsured and uninsured people. It is a vicious cycle.

For more information, visit http://www.nber.org/bah/fall04/w10709.html.