Download eBook for Free

FormatFile SizeNotes
PDF file 0.2 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

This study examines the impact of malpractice reforms on physician behavior using a new measure of liability risk and a nationally representative, individual-level dataset on physician behavior. The authors first develop a theoretic model in which physicians are unable to fully insure against liability risk. They then match their liability measure to data on physician behavior from the Physician Practice Costs and Income Survey (PPCIS). Data from the PPCIS bracket a period of substantial state-level legal reform between 1983 and 1988, which provides identifying variation in their liability measure. They estimate the impact of liability reform on hours worked. They find an estimated elasticity of hours worked to liability exposure of -0.285 for the full sample of physicians. The interpretation is that a 10 percent increase in expected liability costs (not necessarily malpractice premiums) is associated with a 2.85 percent decrease in hours worked. The effect for physicians age 55 or older is much larger: They find an elasticity of -1.224 for this category. They also examine the link between their ‘pure’ liability measure and malpractice premiums. They find that an increase in $1 of expected liability is associated with a $0.699 to $1.05 increase in malpractice premiums, although there remains substantial unexplained variation in premiums after accounting for expected liability and observable demographic characteristics of physicians.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Labor Supply and Liability Exposure

  • Chapter Three

    Data Description

  • Chapter Four

    Estimation Results

  • Chapter Five

    Conclusion

  • Data Appendix

This research was performed by the RAND Institute for Civil Justice.

This report is part of the RAND Corporation working paper series. RAND working papers are intended to share researchers' latest findings and to solicit informal peer review. They have been approved for circulation by RAND but may not have been formally edited or peer reviewed.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.