Non-economic Damages Caps - Efficacy of Caps

Efficacy of Caps

Many states have debated, passed legislation or amended their constitutions to create such caps. Former President George W. Bush proposed a nationwide $250,000 cap in medical malpractice cases. In the area of medical malpractice, tort reform advocates claim that insurance premiums would decrease, both making medical care more affordable and eliminating a disincentive for doctors to practice. In contrast, critics contend that high medical malpractice insurance rates are a result of the cyclical nature of the insurance industry, lack of competition, mismanagement of reserves and a decline in investment income. Recent data has indicated that medical malpractice rates are generally no longer rising. In 2011, data pooled from the industry by the publication Medical Liability Monitor indicated that medical malpractice insurance rates had declined for four straight years. The decrease was seen in both states that had enacted tort reform and in states that had not, leading actuaries familiar with the data to suggest that patient safety and risk management campaigns had had a more significant effect.

There are further disputes over if these caps would reduce overall medical costs for patients at all. A study by the U.S. Congressional Budget Office published in 2004 found that “Malpractice costs account for less than 2 percent of health care spending." However, tort reformists cite other possible effects of limiting tort liability, such as reducing the extent to which physicians practice “defensive medicine” and preventing widespread problems of access to health care.