Gov. Rick Perry’s Texas medical malpractice law: What it does, doesn’t and might do

at 04:38 PM ET, 08/16/2011

It’s already become a relatively well-worn talking point in Gov. Rick Perry’s three-day old campaign for the GOP presidential nomination: his work on medical malpractice law changes has doctors flocking to the Lone Star State. “He’s fought for lawsuit reform that’s brought thousands of doctors to Texas,” his first campaign ad boasts. During a campaign stop this past Sunday, he noted that Texas has had the “most sweeping tort reform in the nation.”

What Perry is referring to is a medical malpractice law he signed in 2003, which limited non-economic damages to $250,000 in cases brought against individual physicians. The law is widely regarded as one of the most aggressive medical malpractice overhauls in the country.

There’s little doubt that Texas’s law is a strong push to tamp down on medical malpractice lawsuits. But what does that mean for health care costs and provider access in Texas? There, the picture is a bit more blurry.

“Other than the fact that they do reduce medical malpractice premiums, to me, they’re not a big player in terms of health care costs,” says Leonard Nelson, a law professor at Samford University who has spent decades studying the impact of medical malpractice reform. “The caps have been around since the mid-1970s and, in terms of controlling costs, we think there’s a lot of other things that are more promising.”

Here’s a quick round up on the academic literature available on the Texas law, and what it says about the cap’s impact:

What the Texas law might have done: increase the number of doctors.

The number of physicians in Texas has indeed increased since the 2003 medical malpractice measure passed. A 2007 New York Times article says there was an “influx” of doctors that raised the state’s “abysmally” low ranking in physicians per capita. But the American Association for Justice notes that the number of doctors was on the rise before 2003, both in Texas and nationally. “The number of physicians practicing in Texas did increase following the enactment of the cap, but the rate of the increase is the same as the rate of increase prior to the cap,” says AAJ’s Michelle Widmann. “In fact, the number of practicing physicians in Texas has been steadily increasing for years.” AAJ’s chart of data from the American Medical Association:


(American Association for Justice)

But as Aaron Carroll at the Incidental Economist points out, the overall population has been growing steadily, too. So the ratio of doctors to patients actually looks pretty similar to what it was before the medical malpractice law passed in 2003:

The academic literature is pretty mixed on how much such a medical malpractice measure increases access to physicians, although there generally seems to be more of an impact on speciality fields. It’s particularly difficult to parse how much of Texas’ physician growth has come from the medical malpractice law - and how much is tied up in the state’s abnormally high job growth through the recession. As Clark puts it, “If Houston is booming and you’re a physician in Detroit, you might want to relocate to Houston. And that might not have a lot to do with what your medical malpractice insurance bill looks like.”

What the Texas law has done: drive down payouts in medical malpractice lawsuits

The way Texas structured its cap on medical malpractice suits - limiting non-economic damages, rather than total damages - seems to have had a particularly strong impact. A 2009 study found that, holding other factors constant, the Texas cap will reduce non-economic damages by 73 percent in cases that go to trial. In cases that are settled, the estimated decline in payouts is 18 percent.

That decrease in payouts is thought to have decreased the cost of medical liability insurance in Texas. Since the law passed, many Texas liability insurers have announced rate cuts.

What the Texas law hasn’t done: drive down medical costs.

Texas’s health care costs have continued to grow at rate faster than the national average. Kaiser Family Foundation’s most recent numbers estimate that the state’s health care costs have grown at a rate of 7.4 percent through 2004, the last year for which data is available. The average rate of growth for the entire country is 6.7 percent.

This story has been updated since it was first posted.

 
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