Tort Reform and Physician Labor Supply: A Review of the Evidence

There is a large empirical literature examining the relationship between medical liability reform and the supply of physician services. Despite the general consensus that malpractice reform leads to an increase in physician supply, usually targeted amongst a subset of physicians, debates rage at the state level over the effectiveness of any given reform. This paper reviews the evidence on the relationship between tort reform and physician supply and assess the implications for any given state. Although our difference in difference methodology prevents drawing conclusions about the impact of reforms on overall physician supply, we find that noneconomic damage caps increase the supply of physicians in high risk specialties. However, these effects, even for the high risk specialties, vary significantly across states. It is unclear whether these differences represent heterogeneous treatment effects across states, or simply random error in the estimates. New approaches are needed to estimating state-specific effects of tort reform to have the most impact on local policy debates. JEL Classification: I11, G22, K13