Conservative Think Tank Cato Institute Questions Benefits of Damage Caps

There have been a number of blog entries on this site about how tort reform laws do not seem to do what they are meant to do. Studies show that instead of lowering healthcare costs and improving access to doctors, these laws can have the opposite effect. There are more dangerous drawbacks to damage caps as well. The Cato Institute, a public policy research organization, recently analyzed medical malpractice damage cap policies and reported on their findings.

The first issue the paper addresses is that damage caps may result in patients not receiving adequate compensation for their physician caused injuries. Without the money, these patients may face additional hardships throughout their lives. They may be unable to work, increasing their financial struggles. Medical bills are also extremely expensive and if a doctor’s negligence has resulted in a permanent injury requiring constant care it only seems right that the one responsible pays those bills. Furthermore, in the absence of the wrongdoer paying, all of society picks up the bill as the injured party begins over utilizing taxpayer supported programs such as social security, Medicare, and Medicaid.

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The second point considered has to do with the deterrent function of medical malpractice liability. The fact that damage caps reduce a physician’s responsibility may make physicians less likely to work to reduce the risk of negligent injuries. Basically, if the punishments for mistakes are not so severe, some may not see the worth in doing more work to avoid the outcome.

Damage cap supporters argue that medical malpractice insurance companies do not track the individual’s actual damages and therefore do not reward quality physicians or penalize negligent doctors. However, evidence indicates that medical malpractice insurance carriers can and do use various ways to reduce the risk of patient injury. Higher risk physicians pay more in premiums than those with lower risk, medical malpractice insurance agencies offer incentives for physicians to reduce their risks, and they disseminate information to help the medical community reduce patient dangers.

The study concludes that medical malpractice liability insurance protects consumers. Damage caps help to protect doctors from their mistakes and have a negative impact on their patients.