This article appeared on Substack on October 13, 2023.
The Wall Street Journal recently praised Nikki Haley for advocating healthcare tort reform during the Republican debate. Haley and the WSJ believe that excessive malpractice lawsuits increase healthcare costs by forcing doctors to pay for expensive insurance and by incentivizing unnecessary defensive procedures.
Healthcare costs are undoubtedly out of control. Yet the percentage of healthcare costs due to malpractice suits is modest and has been relatively stable over time.
Even if lawsuits were a major source of health cost inflation, tort law reform invites unintended consequences. Doctors may increase risky surgeries, for example, if they have less fear of being sued. Studies suggest that reforms have contributed to worse patient outcomes or increased use of certain procedures, implying higher costs.
The policies that cause high and rising health care costs are subsidies for health insurance (Medicare, Medicaid, Obamacare, and the tax exclusion for employer‐paid health insurance premiums). Politicians looking to constrain health costs should trim these subsidies.
