Do damages caps reduce medical malpractice insurance premiums? A systematic review of estimates and the methods used to produce them

Abstract

Despite common claims made in policy debates, the theoretical connection between tort reform and medical malpractice insurance premiums is ambiguous. Simple models suggest reforms such as statutory damages caps reduce premiums. More elaborate models that account for changes in physician behavior suggest caps might increase or have no impact on premiums. A number of empirical studies have been conducted to estimate the impacts of caps on premiums, and several qualitative literature reviews have attempted to draw general conclusions from the literature. No review, however, has offered a comprehensive and systematic analysis of the full set of empirical studies. This Chapter fills that gap. We provide a first glimpse at the wide methodological variations in the studies that employ regression analysis to estimate the impacts of caps on medical malpractice insurance premiums. We describe 16 empirical studies that report 197 estimates of the impact of caps on premiums. Using a theory-driven framework to develop a set of best practices, we find that little weight can be put on any one study due to broad methodological shortcomings. This Chapter highlights the need for better data and additional research on the impact of caps on premiums. ∗ Professor of Law, Georgetown University Law Center, zeiler@law.georgetown.edu; www.georgetown.edu/faculty/kmz3/. This study is forthcoming in RESEARCH HANDBOOK ON THE ECONOMICS OF TORTS, (ed. Jennifer Arlen). Some of the work was conducted during a research fellowship at Harvard Law School’s Petrie-Flom Center. Special thanks go to Jennifer Arlen, Charles R. Silver, Joshua Teitelbaum and a number of anonymous reviewers for helpful comments. Useful suggestions were provided during workshops at University of Southern California School of Law, Georgetown University Law Center, and New York University School of Law. Chinyere Ajanwachuku, Sean Dickinson, Timothy Drake, Sean Higdon and Sophia Lee provided excellent research assistance. Many thanks, as always, go to Morgan Stoddard, my exceptional law library research companion. ‡ Visiting Scholar, University of Toronto Faculty of Law