How Does Tort Reform Affect Health Care Delivery?

Health care costs in the U.S. have grown dramatically over the past several decades, with one possible cause being physicians providing unnecessary services out of fear of being sued for malpractice – a phenomenon known as “defensive medicine”. States responded by enacting different types of tort reforms. This paper reviews the literature on the effects of these tort reforms on outcomes related to malpractice risk, quantity and quality of health care services, overall utilization and expenditures, physician supply, and patient affordability. We use Google Scholar to identify papers that fall into this scope and use either associational or quasi-experimental quantitative methods. The preponderance of evidence points towards non-economic damage caps reducing malpractice risk, quantity of services (aside from diagnostics and obstetrics), and overall health care utilization and expenditures while increasing physician supply and not having detrimental effects on patient outcomes. In general, the effects of other types of tort reforms are less clear. The literature would benefit from further research utilizing recent methodological advances related to combining machine learning with causal inference and eliminating bias from heterogeneous treatment effects in staggered-treatment-time models.