New York Malpractice Reform

Paul H. Rubin —  25 March 2011

The state of New York is considering a cap on noneconomic damages (“pain and suffering”) for malpractice in order to save money.  The New York Times story asks

“… who benefits from caps — doctors or insurers — and whether the measures inflict unintended negative consequences upon victims of medical errors, including plaintiffs’ inability to find lawyers to take their cases.”

But in fact the evidence is that consumers actually benefit from such a cap. In a paper published in the Journal of Law and Economics in 2007 Joanna Shepherd and I examined the effect of various tort reforms on accidental death rates in states for the period 1981-2000.  We found that overall states that had passed tort reforms had lower accidental death rates, probably because of the increased availability of physicians in emergency rooms and other settings.  For the particular case of damage caps, we found that overall these caps led to a total of 5000 fewer deaths.  So we can have our cake and eat it too — caps will save money and also make New Yorkers safer.

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Paul H. Rubin

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PAUL H. RUBIN is Samuel Candler Dobbs Professor of Economics at Emory University in Atlanta and formerly editor in chief of Managerial and Decision Economics. He blogs at Truth on the Market. He was President of the Southern Economic Association in 2013. He is a Fellow of the Public Choice Society and is associated with the Technology Policy Institute, the American Enterprise Institute, and the Independent Institute. Dr. Rubin has been a Senior Economist at President Reagan's Council of Economic Advisers, Chief Economist at the U.S. Consumer Product Safety Commission, Director of Advertising Economics at the Federal Trade Commission, and vice-president of Glassman-Oliver Economic Consultants, Inc., a litigation consulting firm in Washington. He has taught economics at the University of Georgia, City University of New York, VPI, and George Washington University Law School. Dr. Rubin has written or edited eleven books, and published over two hundred and fifty articles and chapters on economics, law, regulation, and evolution in journals including the American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, Journal of Legal Studies, and the Journal of Law and Economics, and he frequently contributes to the Wall Street Journal and other leading newspapers. His work has been cited in the professional literature over 8000 times. Books include Managing Business Transactions, Free Press, 1990, Tort Reform by Contract, AEI, 1993, Privacy and the Commercial Use of Personal Information, Kluwer, 2001, (with Thomas Lenard), Darwinian Politics: The Evolutionary Origin of Freedom, Rutgers University Press, 2002, and Economics, Law and Individual Rights, Routledge, 2008 (edited, with Hugo Mialon). He has consulted widely on litigation related matters and has been an adviser to the Congressional Budget Office on tort reform. He has addressed numerous business, professional, policy, government and academic audiences. Dr. Rubin received his B.A. from the University of Cincinnati in 1963 and his Ph.D. from Purdue University in 1970.

2 responses to New York Malpractice Reform

  1. 
    Paul H. Rubin 25 March 2011 at 9:56 am

    We had no direct evidence on physicians — only on death rates. Did not consider the moral hazard issue, but damage awards are sufficiently rare that I would be very surprised if it is an issue.

  2. 
    Steve Salop 25 March 2011 at 9:46 am

    Very interesting causation. I never thought of that. Did you confirm empirically that the tort reform states had greater availability of physician in ERs and other settings? Did you reject the moral hazard hypothesis that people were more careful and so had fewer accidents in tort reform states?