The Impact of State Medical Malpractice Reform on Individual-Level Health Care Expenditures

Past studies of the impact of state-level medical malpractice reforms on health spending produced mixed findings. Particularly salient is the evidence gap concerning the effect of different types of malpractice reform. This study aims to fill the gap. It extends the literature by examining the general population, not a subgroup or a specific health condition, and controlling for individual-level sociodemographic and health status.

We merged the Database of State Tort Law Reforms with the Medical Expenditure Panel Survey between 1996 and 2012. We took a difference-in-differences approach to specify a two-part model for analyzing individual-level health spending. We applied the recycled prediction method and the bootstrapping technique to examining the difference in health spending growth between states with and without a reform. All expenditures were converted to 2010 U.S. dollars.

Only two of the 10 major state-level malpractice reforms had significant impacts on the growth of individual-level health expenditures. The average annual expenditures in states with caps on attorney contingency fees increased less than that in states without the reform (p < .05). Compared with states with traditional contributory negligence rule, the average annual expenditures increased more in both states with a pure comparative fault reform (p < .05) and states with a comparative fault reform that barred recovery if the plaintiff's fault was equal to or greater than the defendant's (p < .05).

A few state-level malpractice reforms had significantly affected the growth of individual-level health spending, and the direction and magnitude of the effects differed by type of reform.