The Differential Effects of Malpractice Reform: Defensive Medicine in Obstetrics

Recent studies argue that different types of patients are affected differently by changes in malpractice pressure. We argue that defensive medicine causes these differential effects. Our theoretical model predicts that reduced malpractice pressure decreases health care spending among patients with good access to care, but increases spending among those with poor access. We test this theory by estimating the effects of tort reforms on birth by cesarean section. Reduced malpractice pressure through collateral source rule reform decreases C-section rates by 4.75% for mothers with timely initiation of prenatal care. On the other hand, reduced pressure through noneconomic damages caps increase C-section rates by 7.59% for mothers without timely initiation. These findings are consistent with defensive medicine. Further investigation suggests that reduced pressure improves access to care for vulnerable populations and reduces utilization among well-served consumers. These findings explain the literature’s conflicting assessments of defensive medicine, despite its practice being widespread.