Will Tort Reform Bend the Cost Curve? Evidence from Texas

44 Pages Posted: 9 May 2012

See all articles by Myungho Paik

Myungho Paik

Hanyang University - College of Policy Science

Bernard S. Black

Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

David A. Hyman

Georgetown University Law Center

Multiple version iconThere are 2 versions of this paper

Date Written: June 2012

Abstract

Will tort reform “bend the cost curve?” Health‐care providers and tort reform advocates insist the answer is “yes.” They claim that defensive medicine is responsible for hundreds of billions of dollars in health‐care spending every year. If providers and reform advocates are right, once damages are capped and lawsuits are otherwise restricted, defensive medicine, and thus overall health‐care spending, will fall substantially. We study how Medicare spending changed after Texas adopted comprehensive tort reform in 2003, including a strict damages cap. We compare Medicare spending in Texas counties with high claim rates (high risk) to spending in Texas counties with low claim rates (low risk), since tort reform should have a greater impact on physician incentives in high‐risk counties. Pre‐reform, Medicare spending levels and trends were similar in high‐ and low‐risk counties. Post‐reform, we find no evidence that spending levels or trends in high‐risk counties declined relative to low‐risk counties and some evidence of increased physician spending in high‐risk counties. We also compare spending trends in Texas to national trends, and find no evidence of reduced spending in Texas post‐reform, and some evidence that physician spending rose in Texas relative to control states. In sum, we find no evidence that Texas's tort reforms bent the cost curve downward.

Suggested Citation

Paik, Myungho and Black, Bernard S. and Hyman, David A., Will Tort Reform Bend the Cost Curve? Evidence from Texas (June 2012). Journal of Empirical Legal Studies, Vol. 9, Issue 2, pp. 173-216, 2012, Available at SSRN: https://ssrn.com/abstract=2055067 or http://dx.doi.org/10.1111/j.1740-1461.2012.01251.x

Myungho Paik (Contact Author)

Hanyang University - College of Policy Science ( email )

222 Wangsimni-ro Seongdong-gu
Seoul, 04763
Korea, Republic of (South Korea)

Bernard S. Black

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

David A. Hyman

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
1,218
PlumX Metrics