A Historical Perspective on the Present Value Assessment of Medical Care

Abstract

This article presents the results of an integrated historical evaluation of the relationships among the variables that determine present value awards for future medical care expenses in present value awards for future medical care expenses in personal injury and medical malpractice litigation. The relationships between interest rates and growth rates in the prices of individual components of medical care were relatively stable from 1952 through 1985, but the relationships varied dramatically across different types of medical care. Substantial misstatements in present value awards may result if expenses for different types of medical care are aggregated improperly or if the analysis does not accurately specify the taxable status of medical expenses for purposes of determining the tax liability of future incomes.