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Optimality of no-fault medical liability systems

Author

Listed:
  • Kao, Tina
  • Vaithianathan, Rhema

Abstract

This paper considers a model of defensive medicine where doctors are imperfect agents of insured patients. A national insurer subsidises both curative and preventive medical care consumed by risk averse patients. We show that in such an environment, the optimal liability regime is similar to the no-fault systems of Sweden and New Zealand where the doctor faces zero liability. The reason is that the subsidy on preventive medicine is a better instrument to induce the optimal level of care than the malpractice regime.

Suggested Citation

  • Kao, Tina & Vaithianathan, Rhema, 2010. "Optimality of no-fault medical liability systems," PIE/CIS Discussion Paper 480, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:piecis:480
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/18618/pie_dp480.pdf
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    More about this item

    Keywords

    no-fault liability systems; malpractice liability; defensive medicine; copayment ratio;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D60 - Microeconomics - - Welfare Economics - - - General

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