The paper's conclusion is short and sweet.We evaluate the potential of tort reforms to reduce health care spending by studying how Medicare spending in Texas changed after the state adopted a comprehensive package of tort reforms in 2003, including a fairly strict cap on non-economic damages. Using longitudinal data on med mal claim rates and on health care spending, we first compare spending trends in Texas to spending trends in neighboring states and the nation as a whole. Post-reform, we find no evidence of reduced Medicare spending in Texas relative to these comparison groups. We then compare health care spending in Texas hospital service areas (HSAs) with high med-mal pressure to Texas HSAs with low med-mal pressure. Pre-reform, we find no evidence that Medicare spending was higher in high- pressure HSAs than low-pressure HSAs, and no evidence that spending grew faster in high-pressure HSAs. Post-reform we find no evidence that high-pressure HSAs experienced any change in spending trends, relative to low-pressure HSAs.
In sum, we find no evidence that Texas‟ 2003 tort reforms “bent the cost curve.”
Our findings do not indicate that there is no such thing as defensive medicine. But, it does not appear that tort reform offers a promising way of reducing whatever defensive medicine actually exists. Even a major shock to Texas med mal risk produced, as best we can tell, no apparent effect on health care spending. We thus offer evidence that those interested in a magic bullet that will limit the growth of health care spending should look elsewhere.