Malpractice law, physicians’ financial incentives, and medical treatment: How do they interact?

Research output: Contribution to journalArticlepeer-review

14 Scopus citations

Abstract

The effects of malpractice law and financial incentives on physicians are typically studied independently. This paper shows that to make both positive and normative statements about medical malpractice liability, one must consider physicians’ legal and financial incentives jointly. I develop a simple model to show that when treatment is unprofitable at the margin, mitigation of liability lowers treatment levels; conversely, when treatment is profitable, mitigation of liability raises them. Motivated by this simple theoretical framework, I analyze the impact of a tort reform in Texas that mitigated malpractice liability. Consistent with the theory, the rate of cesarean sections among commercially insured mothers, for whom the procedure is considered profitable, increased by 2 percentage points relative to the rate of cesarean sections among mothers covered by Medicaid, for whom the procedure is thought to be unprofitable.

Original languageEnglish
Pages (from-to)1-29
Number of pages29
JournalJournal of Law and Economics
Volume57
Issue number1
DOIs
StatePublished - 1 Jan 2014
Externally publishedYes

Fingerprint

Dive into the research topics of 'Malpractice law, physicians’ financial incentives, and medical treatment: How do they interact?'. Together they form a unique fingerprint.

Cite this