Author Archive | David Hyman

Health Reform: ERISA and Pay or Play

A majority of Americans obtain health insurance through their place of employment, or the place of employment of an immediate family member. The Census Bureau provides more detail in Figure 7, here. However, small employers, and employers in certain sectors of the economy (e.g., retail and agriculture) are much less likely to offer coverage. In the view of many, employers that fail to offer coverage to their employees (leaving aside, for the moment, the affordability of that coverage), are morally blameworthy free-riders. A popular policy response is a [...]

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Damage Caps and Medical Malpractice VII

My next set of posts will be on the impact of damages caps on access to medical services. Because it is hard to measure access directly, and most of the available measures lack political salience, the debate usually focuses on the number and specialty of physicians practicing in the state. This is a problematic measure for all sorts of reasons, but let’s just take it as a given for now.

The focus can get extremely specific. In the debate over enacting a damages cap in Illinois (ultimately enacted in 2005, and currently under review by the Illinois Supreme Court), as this article observes, “the phrase ‘there are no neurosurgeons south of Springfield’ came to represent the threat of the medical liability issue. . .”

This claim was picked up and repeated by physicians, legislators, and tort reform advocates. Consider a few examples.

There’s this article, titled “Illinois physicians say insurance rates are driving them out of state,” and quoting a family physician (Dr. Mark Dettro):

“We are losing all these doctors to other states where they have caps on pain and suffering,” Dettro said. “There will no neurosurgeons south of Springfield in Illinois. If you have a car wreck in Southern Illinois then the odds aren’t very good for you.”

Dr. Ed Ragsdale was quoted to the same effect in this article:

This has been an uphill battle. We

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Damage Caps and Medical Malpractice Litigation: VI

Ok, one last posting on cap design, before I move on to the impact of caps on physician supply. As I noted previously, when California adopted the first non-econ cap in 1975, it set the level at $250,000, without an inflation adjustment. That approach has anchored subsequent debates over non-econ caps. Most state damage caps are not indexed for inflation, so their impact becomes stricter over time.

If the California non-econ cap was inflation adjusted, it would have been $855k in 2003, and $970k in 2007. The next table shows how not adjusting for inflation affects the impact of the California cap at various points over time. The first four rows estimate the payout reduction in tried cases if the cap had been set at the level that applied during the specified year. The last four rows estimate the payout reduction into the future, using two different assumptions about the inflation rate.

To summarize the last several postings, cap design is usually ignored, but it makes a big difference in cap impact. The moving parts include the absolute cap level, whether the cap is on non-econ damages or total damages, whether it affects all or only some cases, and whether it is inflation-adjusted or not. [...]

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Damage Caps and Medical Malpractice Litigation: III

Ok, so today I will be much shorter, and start right up with our findings. I ended my last post with a bunch of points, including our estimation that the Texas cap will reduce payouts in tried cases by 27%, and settled cases by 18% (assuming no change in the volume and mix of cases). In dollar terms, that corresponds to a reduction of $60M in payouts for tried cases, and $780M in settled cases. (For reasons that the paper outlines, these figures are in 1988$ — to get to 2008$, multiply by 1.83 [...]

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Damage Caps and Medical Malpractice Litigation: II

Yesterday, I reviewed some background on damages caps. Today, I want to focus on the effect of damages caps on payouts. Of course, payouts are not the only thing worth studying, as the comments to my first posting reflect. Access to medical services might well be affected by a cap. So might malpractice premiums [...]

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