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Medical malpractice crises occur across states to differing degrees, thus the proposed changes in state tort reforms differ accordingly. The primary overt goals of tort reform aim to address: rising medical malpractice insurance rates, increased frequency and severity of awards, and the increased incidence of doctors shuttering offices or fleeing states due to untoward malpractice environments. A secondary goal of tort reform is to reduce health care costs attributed to malpractice costs. Clearly, as malpractice tort reforms are debated in state capitols and reforms take place, the effects of the reforms on the goals above can be examined. However, there is an often ignored implication of reform requiring attention. How do reforms affect doctors' decisions and behaviors in treating patients? Specifically, do doctors change their behavior as the malpractice environment changes, and if so, do these changes affect health care costs? Given the variety of state tort reforms occurring over the last several years, we can examine how each one affects health care costs attributed to changes in physician behavior.

Since the early 1970's economists, lawyers, and many within the medical community have debated the existence of defensive medicine. Using the Office of Technology Assessment definitions (OTA, 1994), positive defensive medicine occurs when physicians order additional tests or procedures primarily to avoid malpractice liability. Negative defensive medicine occurs when doctors avoid certain patients or treatments chiefly out of concern for malpractice liability. The thrust of this paper deals with positive defensive medicine. Given different malpractice environments across states, we witness variations in positive defensive medicine practices leading to differences in health care expenditures.

The plan of the paper is as follows. First, we note the existence of defensive medicine. Next, we discuss malpractice tort reform across states. Lastly, we show which reforms have demonstrable impacts on defensive medicine and therefore on health care expenditures.


This article originally published in the Virginia Economic Journal, Vol. 10, 2005, pp. 75-87.