Defensive Medicine May Be Costlier Than It Seems

NCPA February 11, 2013

Many physicians maintain that fear of lawsuits significantly affects the practice of medicine, and that reform of the malpractice system is crucial for containing costs, say Amitabh Chandra, a professor of public policy at Harvard's Kennedy School of Government, Anupam B. Jena, a professor of health care policy at Harvard Medical School, and Seth A. Seabury, a professor at the Schaeffer Center for Health Policy and Economics at the University of Southern California.

• On the other hand, several economic studies have found that states that have enacted malpractice reforms experienced a mere 2 percent to 5 percent reduction in health care spending compared to states that have not.
• This has led to a loose consensus among most economists and policymakers that defensive medicine is not an important contributor to U.S. health care spending -- and therefore that malpractice reform is not of much significance for containing costs.

The relatively minor reductions in health care spending that have been observed in comparative studies might result from the fact that, even in reform states, doctors continue to practice defensive medicine.

• Using data from the most recent Health Tracking Physician Survey (2008), which asked physicians about their beliefs and attitudes towards malpractice risk, Chandra, Jena and Seabury found that 68 percent of physicians in the five states with the highest malpractice risk reported "ordering some tests or consultations simply to avoid the appearance of malpractice."
• Yet 64 percent of physicians in the five states with the lowest malpractice risk reported doing the same thing.

Going forward, physician associations concerned with malpractice reform might do far better by their membership if they focused on things such as "disclosure-and-offer programs." Here providers voluntarily disclose adverse events to affected patients and, when appropriate, make offers of restitution prior to the filing of any lawsuit. The goal of these offers, like payments from no-fault compensation funds, is to reduce the frequency of claims and avoid costly litigation.

Source: Amitabh Chandra, Anupam B. Jena and Seth A. Seabury, "Defensive Medicine May Be Costlier Than It Seems," Wall Street Journal, February 7, 2013.