I’ve always been skeptical of the utility of medical malpractice lawsuits. A new study by Michael Frakes and Jonathan Gruber finds evidence that they are counterproductive:
We estimate the extent of defensive medicine by physicians, embracing the no-liability counterfactual made possible by the structure of liability rules in the Military Health System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care, while protections are provided to dependents treated at military facilities and to all patients—active duty or not—who receive care from civilian facilities. Drawing on this variation and exploiting exogenous shocks to care location choices stemming from base-hospital closures, we find suggestive evidence that liability immunity reduces inpatient spending by 5 percent with no measurable negative effect on patient outcomes.
I suspect that the actual waste exceeds the 5% figure cited in the abstract. Recall that active duty patients represent only a tiny share of all medical patients in the US. Our health care system has evolved over time to meet the needs of a patient population that for the most part is able to sue for malpractice. Over the past few decades, certain defensive medicine procedures have become viewed as “normal” because they are used so frequently.
While I cannot be certain, I suspect that many doctors unthinkingly employ suboptimal defensive medicine in cases involving active duty personnel, because they are used to doing so for other patients. If so, then a complete elimination of malpractice insurance could gradually change the “culture”, leading to even greater cost savings.
Furthermore, eliminating medical malpractice lawsuits would also result in less resources being wasted on litigation.
One approach might be to give doctors and hospitals the option of having patients sign contracts that wave away their right to sue. If there were a strong demand for the right to sue, then you’d expect some hospitals to offer that option for competitive reasons. That sort of health care would obviously be more expensive, and I would not expect many patients to choose that option. How many skiers choose to go to ski resorts that allow them to sue for injuries? It seems to me that most people prefer cheaper services over the right to sue.
Note that my proposal might require a constitutional amendment, as courts are reluctant to allow people to wave away their right to sue in regard to “necessities”.
PS. I favor allowing people to waive away their right to sue in a wide variety of contexts. Thus bars should be able to insist that customers who get drunk and get into auto accidents refrain from suing the bar. Similar restraints on lawsuits in other areas of life could make our economy much more efficient, with a wider range of services. Most Americans are not aware of how many services they are not able to purchase due to fear of lawsuits.
HT: Ben Southwood
READER COMMENTS
Maniel
Aug 10 2019 at 6:57pm
I concur. The other side of litigation is insurance. My cardiologist retired at 65. He had wanted to work part time, but given the cost of malpractice insurance, he could not afford to.
BTW, discouraging malpractice lawsuits is one my four principles of healthcare reform, two others being eliminating tax exemptions for company-supplied health insurance and allowing insurance companies to compete across state lines. A fourth principle, unlikely to ever be realized, is that the geniuses in our government create a plan for me that also applies to them.
Scott Sumner
Aug 11 2019 at 12:40am
Good ideas. We also need to remove barriers to entry in medicine.
Thaomas
Aug 11 2019 at 6:38am
Including encouraging “medical tourism” through changes in public and private insurance and making immigration and certification of foreign trained health care professionals easier.
Also should not the training of physicians include how to consider the costs of different treatments? Yglesias claims that there is not much demand for treatments that are 90% as good but 50% of the cost. If that’s true, why not?
Thomas Bixby
Aug 11 2019 at 8:21pm
Worst idea ever. Lawsuits serve as a check and balance on the medical community. In states with caps malpractice claims have not dropped only the injured get less than a jury allows. Most docs win 90% of malpractice cases. By the way the ski case waivers are adhesion contracts and not enforceable in Vt. Unless you know someone you dont understand the pain of a medical error can cause. Dont take away the right to a jury.
Maniel
Aug 12 2019 at 4:09pm
@Thomas
Reminds me of the story about the pedestrian who was hit by a car. When asked if he was okay, he said, “no, I’m hurt, call a lawyer.”
Mark Brophy
Aug 14 2019 at 2:53pm
Malpractice insurance has practically been eliminated. It’s a tiny portion of the medical expenses in this country. Malpractice suits are much rarer than malpractice.
Benjamin Cole
Aug 10 2019 at 9:49pm
If the United States ever moves to National Healthcare, I hope there is a provision in the law that anyone using the system agrees to binding arbitration for all disputes.
Cliff
Aug 11 2019 at 12:31am
Still, it’s an injustice for someone injured by a doctor’s negligence to not be able to recover his damages (e.g. medical bills, lost time at work). Judgments are usually modest. I guess you would get rid of all tort liability, except for intentional acts, maybe? You don’t think that would result in any reckless behavior? Are we wasting too much money preventing car accidents because of liability for negligent driving?
Scott Sumner
Aug 11 2019 at 12:39am
Cliff, You said:
“I guess you would get rid of all tort liability, except for intentional acts, maybe?”
Absolutely not. Tort laws play an important role in society, discouraging bad behavior. We need to be able to sue to enforce contracts that we have signed, for instance. But I do think that companies should be able to ask people to sign contracts where they wave their right to sue the company. There are huge efficiency gains to be had. After all, would you want skiers to be able to sue ski resorts? As a former skier, I’d be strongly opposed to banning contracts where people waved their right to sue ski resorts.
Zeke5123
Aug 12 2019 at 7:51am
While there are some torts related to interference with contracts, the right to sue under breach of contracts generally is governed by contract law; not torts.
Torts are generally an ex post way of regulating negligence standards. It is an interesting question whether elimination of liability improves outcomes if coupled with insurance.
My concern is the party supplying the insurance can’t impose safety restraints on the party creating the tort — reputation would largely be how it plays out.
Deirdre Dickson Gilbert
Aug 11 2019 at 1:09am
I believe that those harmed by medical negligence should have the right to sue. The notion that medical Malpractice lawsuits are frivolous is far from the truth. Medical personnel that are killing patients and high rates, those accused of rape and sexual assault and those who purposely falsify medical records and cover up deaths should have consequences. The truth here is that those that have suffered from wrong site, wrong organ, or literally subjected to medication or treatments not needed calls for litigation. Until the medical community stop blaming everyone else for the failure of the system it will remain. Yes there are great doctors but when they are forced to keep quiet or retaliated against it lends for this abusive behavior we are seeing. Get rid of the bad actors and see how medicine will change.
The National Medical Malpractice Advocacy Association is working on making that happen. I’m the National Director.
Scott Sumner
Aug 12 2019 at 1:15am
Deirdre, You said:
“Medical personnel that are killing patients and high rates, those accused of rape and sexual assault and those who purposely falsify medical records and cover up deaths should have consequences.”
I’m not sure if this relates to my post, but I certainly wasn’t suggesting that doctors who rape should not face consequences.
As far as bad outcomes from medical procedures, I would allow people to buy insurance to compensate for the harm done by a botched operation. If addressing this through litigation would boost the quality of care, that might also be a good option. But apparently it does not boost the quality of health care.
Deirdre Gilbert
Aug 13 2019 at 6:08am
Your article references should we discourage medical Malpractice lawsuits and because of Tort Reform it has already been discouraged. It’s literally impossible for someone who has been harmed to receive justice. Every other entity can take someone to court for unscrupulous or dangerous behavior, except for medical negligence. If a person or entity is continually harming patients two things should happen (1) this person should not be practicing (2) this person should be held accountable for their behavior. We can go back and forth and say people make mistakes and I agree, but in egregious situations in the ones I spoke about which is becoming more the norm because they perpetrators are protected, litigation is the only option. Physicians or medical professionals who do these horrible things can hide their behaviors and it is totally unfair to families that have lost loved ones to a person who has taken it that they have been chosen to take life they never gave. Again mistakes happen, repentance happens, but to continually do harm because you can is unacceptable. If we take this out of the realm of medical and this sort of behavior is done randomly on the streets , protections are no longer available for you. So the question is why do you are anyone else feel that because I have MD before my name I am privileged to do as I please. This is insanity. Are there times when frivolous lawsuits occur, sure ? But not in medical negligence..nothing is frivolous about a lost life due to someone’s incompetence, rather that’s a lack of training or a narcissistic personality who believes they can do whatever.
Mark Z
Aug 11 2019 at 2:42am
I’d like to see this as well, but I doubt it’s likely. People harmed by medical malpractice (or even not malpractice, but bad luck that looks like it could’ve been malpractice) would be highly sympathetic victims, even after signing away their rights, and I’m not sure the public would tolerate them not being able to get compensation; many people would also view the clinician(s) as getting away with a crime by not having to pay out.
Few would argue that a person who gambles and loses is entitled to compensation; most would also agree that skiing is (a little) risky, and that those who are hurt skiing made a gamble and lost, and that’s not the resort’s fault; but I expect most people would see medicine (perhaps excepting experimental treatments) as different, something that really shouldn’t be a gamble at all, and generally isn’t (at least in the sense that it usually doesn’t positively cause unforeseen harm), so someone signing a waiver that might increase their chance of suffering medical malpractice from a very small number to a slightly larger but still very small number, and then suffering said malpractice, may not seem like someone who just took a rational gamble, since it’s sufficiently rare that we just ought to be able to expect that it will never happen, and when it does, it’s an outrage regardless of what papers were signed (again, this is just how I think most people will see it).
BC
Aug 11 2019 at 2:02pm
Maybe, another way to frame Scott’s proposal is that patients should have the option to forgo defensive medical procedures. Currently, doctors require patients to receive, and pay for, defensive procedures because not performing those procedures exposes doctors to liability. The doctor could inform the patients of the risk of doing without the defensive procedures, letting the patient decide whether he is willing to assume that risk. If not, then the patient will have to pay for the defensive procedure. If patient is willing to accept the risk, then he won’t have to pay for the defensive procedure but will also give up the right to sue the doctor for not doing that procedure. That makes it more like deciding whether one wants to risk skiing. It’s deciding not to take a test “just to be on the safe side”.
Having said that, if the defensive procedures in question are paid for by insurance, then I’m not sure why patients would opt out. So, the procedures need to be treated as elective or at least fall underneath the deductible for most patients.
Jennifer Johnson
Aug 11 2019 at 7:51am
My mother was killed in June by the hands of a Cardio Dr during a simple heart ablation procedure.. he perforated her heart causing her to bleed out.. so you think we have no right to fight for her life that was taken ??
Scott Sumner
Aug 12 2019 at 2:56pm
Sorry to hear about your mother, but I think you are misinterpreting my post. I favor allowing contracts where people waive their right to sue. I doubt your mother signed such a contract.
Speaking for myself, I’d be happy to sign such a contract before receiving medical care, if it reduced my costs by the amount the doctor saved on malpractice insurance.
Alan Goldhammer
Aug 11 2019 at 8:13am
Not all malpractice comes from adverse surgical outcomes. In a number of cases it is improper diagnosis of someone who appears to be healthy. I had a good friend whose benign brain tumor was not diagnosed by an ENT despite five visits over 18 months for the problem. He then had to endure major surgery that resulted in deafness in one ear.
I’m not a big fan of using tort liability to police the medical/hospital profession but unfortunately it sometimes is the only tool available.
Scott Sumner
Aug 12 2019 at 1:17am
So are you claiming the study’s conclusions are wrong?
Alan Goldhammer
Aug 12 2019 at 7:08am
Scott – The paper is gated and I’m not going to purchase it. I was only noting that malpractice extends beyond hospital/surgical associated issues and can include diagnostic care.
Mike Sandifer
Aug 11 2019 at 10:39am
Scott,
After listening to more lawyers as I age, I realize that the law, and particularly the history of how it evolved, is more complex than most realize, and many laws seem nonsensical or suboptimal on the surface aren’t necessarily so. I think many non-experts in law are too flippant about changes they would make to the law or legal system, and this sometimes goes for economists.
I recall when pretty strict limits on medical malpractice awards were passed in Florida, there was talk of huge savings in healthcare costs. As far as I could tell, no one noticed any difference. Awards were limited to $200k with 2 years to file a lawsuit after damages suffered, if I recall correctly.
This doesn’t mean you’re wrong, but many of the laws we have make a great deal of sense and I find there’s far too much nihilism these days.
Alan Goldhammer
Aug 11 2019 at 1:11pm
Many states have passed legislation capping the amount of money that can be paid out in malpractice awards. It’s usually limited to non-economic damages. The impact on overall healthcare costs has been negligible. I don’t know what the impact is on malpractice insurance since the patient can still be compensated for hospital and other medical costs as well as loss of income.
Scott Sumner
Aug 12 2019 at 1:19am
Mike, You said:
“As far as I could tell, no one noticed any difference.”
Is that conclusion base don a scientific study?
Alan Goldhammer
Aug 12 2019 at 7:19am
Scott – There have been a lot of studies over the years on the impact of malpractice on the cost of healthcare. Some of them are outdated as they were done before malpractice reform was carried out by key states. THIS REPORT by a California physician is most interesting. California does much better than many other states in terms of malpractice costs and claims.
Scott Sumner
Aug 12 2019 at 3:06pm
That report is full of misinformation, such as the claim that the failure to request a test that might have found a particular disease is prima facie evidence of malpractice if the patient did in fact have that disease. That’s false.
As for this:
“If defensive medicine really were exclusively about the fear of malpractice then it should be easy to show that, in the states with higher malpractice costs, far more medical tests and procedures are done. So far, I’ve seen no evidence of that being the case, though.”
Is the study I linked to exactly that sort of evidence? Will this doctor now change his mind?
Mark Z
Aug 12 2019 at 1:45am
How is this not an argument against ever changing laws in general? This just seems like willful juristic status quo bias.
Mark Z
Aug 12 2019 at 2:01am
There are an infinite number of possible treatments that could positively effect outcome for a rare disease, but the effects wouldn’t be detected due to small sample size. That’s not a good argument for any particular treatment being used at the moment. I’m fact, given the sheer number of treatments tailored to a particular disease that don’t work, it’s at least as reasonable to assume, if a treatment has no detectable effect and also a small sample size, that it probably isn’t working. A negative prior may well be more justified; especially since the small sample size also prevents us from detecting negative side effects.
And I don’t think you really have much control over a ski slope. If there happens to be a rock covered in snow in the middle of the hill, you’re almost certainly not going to see it before hitting it. Much of the causality of injury (maybe most) still comes down to bad luck, so the analogy seems ok imo.
Mark Z
Aug 12 2019 at 2:03am
*supposed to be in reply to AMT, no idea how it got up here.
Daniel R. Grayson
Aug 11 2019 at 12:53pm
Change “wave away” to “waive”.
Scott Sumner
Aug 12 2019 at 1:20am
Yes, of course that’s right.
BC
Aug 11 2019 at 2:20pm
“Note that my proposal might require a constitutional amendment, as courts are reluctant to allow people to wa[i]ve away their right to sue in regard to ‘necessities'”.
If A cannot waive his right to sue B, does that automatically preclude A from selling liability insurance to B? If not, then maybe one solution that wouldn’t require changing laws would be for doctors to buy liability insurance from patients. If that’s not legal, then maybe patients could sell re-insurance to insurance companies that sell liability insurance to doctors. In exchange for a discount, the patient would agree to indemnify the doctor for any legal settlements resulting from that patient suing that doctor. Economically, of course, that’s equivalent to waiving the right to sue. Legally, however, the liability insurance might be treated as a separate transaction, legal by itself, that does not preclude the patient from suing the doctor. The patient could still sue the doctor, for example, if the patient thought the doctor’s behavior was so egregious that he wanted the incident to be part of the doctor’s professional record. The patient would just have to pay any legal settlement to himself.
Now, maybe, pro-malpractice people might try to close that loophole (assuming it’s legal under current law). However, passing a new law to close a loophole is much more difficult than stopping existing law from being changed.
The point is that deciding who bears economic risk for various medical outcomes is a purely economic matter and that risk-bearing can be traded. That’s what liability insurance is. There’s no reason why patients should have fewer rights to trade insurance than doctors and insurance companies do. Waiving rights to sue, however, brings in moral and ethical issues as lawsuits don’t merely assign economic payments; lawsuits also assign moral blame.
AMT
Aug 11 2019 at 7:32pm
I’m not sure exactly what they mean by defensive medicine, but my guess is it means ordering extra tests when it’s unlikely to be helpful. But I’m not sure if this conclusion is correct. It might be a “waste” to test for the 0.1% probability illness, but if the rare condition is very severe it could very easily be worthwhile. Statistically, you could easily find no “measurable” negative effect even with a rare, lethal condition that could have been found with additional testing, slipping into the sample analyzed. So I wouldn’t conclude there was zero downside, especially because the magnitude of the downside could be massive (e.g. death). You could easily find that seatbelt use led to no “measurable” difference in outcomes for a sample of drivers, if your sample is so small that there are few accidents. But if you look at the outcomes from accidents, then of course you realize we should use them because the cost is minimal compared to the benefit, even if it is almost always a total waste and inconvenience to wear your seatbelt.
And anyway, I would bet that a lot of medical malpractice cases are actively doing something wrong, or failing to see something that they should have that was already available to them, and “defensive medicine” (insufficient testing) is probably a small part of it.
Your analogy to a ski resort just doesn’t work. It’s about the things that you can personally control. You can be extra careful to avoid anything that looks a bit dangerous when you go skiing. You have no control over whether your doctor shows up drunk to your surgery or makes some basic, careless mistake while you are unconscious. We’re not discussing whether we should we ban “frivolous” lawsuits; malpractice, by definition is negligence. It’s failing to do the minimum required. No contract that any rational person would sign would agree to allow the person performing the service to be NEGLIGENT in their performance. Waivers mainly exist where the service provider is not very active in actually doing anything and most of the ability to minimize risk is with the purchaser. The risk taken while skiing is largely out of the hands of the ski resort. E.g. when you park your vehicle in a parking lot, you lock your vehicle to minimize risk.
Contra, when you hire a contractor to build your fence, of course you should be able to sue them for failing to do the job (breach of contract) because it is entirely within their control, not yours. This is exactly the issue you bring up with bars and drunk drivers (dram shop laws). Risk is most easily minimized through the consumer.
Medical malpractice seems just like a breach of contract. It’s just that in this case where the outcomes are uncertain, you don’t have obvious proof that the job was not performed adequately, compared to a pile of lumber laying in your backyard, which is clearly not a constructed fence. Is it just because the medical procedure had only a 50% chance of success, or was it negligence? I don’t see how you can resolve that besides through litigation.
Scott Sumner
Aug 12 2019 at 1:23am
AMT, Defensive medicine can be harmful. So it’s not correct to say, “There’s no harm in testing for X”.
Many doctors will not perform some types of defensive medicine on themselves, as they know it’s a waste of time and money, and can also be harmful to one’s health.
AMT
Aug 12 2019 at 11:05am
Sure, I can accept that. But whether there is purely a monetary cost or monetary plus physical, in any case it is about cost/benefit analysis, and I could see this type of study getting a misleading answer.
If doctors avoid certain treatments, that is much more persuasive evidence that it fails the cost/benefit analysis! (So long as the doctors are accurately informed, that is.)
AMT
Aug 12 2019 at 11:39am
A follow up:
The real question here isn’t whether or not there should be malpractice lawsuits, it’s where should we draw the line on what is considered malpractice. Obviously it should be based on cost/benefit analysis. You could argue a lot of defensive medicine fails that analysis, but that is very different from arguing against malpractice lawsuits generally.
Scott Sumner
Aug 12 2019 at 2:59pm
Maybe we should let the market decide as to whether there will be malpractice lawsuits.
LK Beland
Aug 12 2019 at 11:27am
This is a very interesting post and scientific article.
To some extent medical-board licensing and malpractice lawsuits serve a common purpose: assuring the public that it will receive competent care. This probably explains a part of the Frakes-Gruber result: there are strong incentives for physicians to act competently, even without the constant threat of civil lawsuits.
One the other hand, there certainly is a rationale to compensate patients whose medical treatment led to damages. Could a “no-fault” insurance system could do the job?
On the physician side, disciplinary action from the medical board and criminal law enforcement are likely sufficient deterrents to malpractice.
BlazingSuth
Aug 12 2019 at 1:54pm
I think there is perhaps some nuance missed in this conclusion. While Active Duty service members are not allowed to sue for malpractice, they are allowed (and often encouraged) to file for VA disability compensation when leaving Active Duty service. If there was medical malpractice that resulted in injury, loss of function or disfigurement, the service member would then be entitled to disability pay on a monthly basis for life, or until the medical problem was resolved by the VA medical system.
This is actually
FAR
more expensive than malpractice insurance or defensive medicine.
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