Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Systematic Review of Estimates and the Methods Used to Produce Them

Research Handbook on the Economics of Torts (Jennifer Arlen ed., Northampton, MA: Edward Elgar Pub 2012)

Georgetown Public Law and Legal Theory Research Paper No. 12-186

Georgetown Law and Economics Research Paper No. 12-042

49 Pages Posted: 28 Nov 2012

See all articles by Kathryn Zeiler

Kathryn Zeiler

Boston University - School of Law

Lorian Hardcastle

University of Ottawa - Common Law Section

Date Written: November 21, 2012

Abstract

Despite common claims made in policy debates, the theoretical connection between tort reform and medical malpractice insurance premiums is ambiguous. Simple models suggest reforms such as statutory damages caps reduce premiums. More elaborate models that account for changes in physician behavior suggest caps might increase or have no impact on premiums. A number of empirical studies have been conducted to estimate the impacts of caps on premiums, and several qualitative literature reviews have attempted to draw general conclusions from the literature. No review, however, has offered a comprehensive and systematic analysis of the full set of empirical studies. This chapter fills that gap. We provide a first glimpse at the wide methodological variations in the studies that employ regression analysis to estimate the impacts of caps on medical malpractice insurance premiums. We describe 16 empirical studies that report 197 estimates of the impact of caps on premiums. Using a theory-driven framework to develop a set of best practices, we find that little weight can be put on any one study due to broad methodological shortcomings. This chapter highlights the need for better data and additional research on the impact of caps on premiums.

Keywords: insurance law, damages caps, medical malpractice insurance premiums, tort reform, economic damages, non-economic damages

JEL Classification: K00, K10, K13, K19

Suggested Citation

Zeiler, Kathryn and Hardcastle, Lorian, Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Systematic Review of Estimates and the Methods Used to Produce Them (November 21, 2012). Research Handbook on the Economics of Torts (Jennifer Arlen ed., Northampton, MA: Edward Elgar Pub 2012), Georgetown Public Law and Legal Theory Research Paper No. 12-186, Georgetown Law and Economics Research Paper No. 12-042, Available at SSRN: https://ssrn.com/abstract=2179074

Kathryn Zeiler (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Lorian Hardcastle

University of Ottawa - Common Law Section ( email )

57 Louis Pasteur Street
Ottawa, K1N 6N5
Canada

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