Studies: Texas Tort Reform Has Had No Effect on Physician Supply, Lowering Costs

Conventional wisdom for many is that the 2003 Texas constitutional amendment limiting medical malpractice lawsuits has created in an influx of physicians from out-of-state and tempered healthcare costs.

Others argued that medical malpractice caps would bring down healthcare costs. The assumption is that physicians would be less inclined to practice defensive medicine. Also, fewer malpractice cases would be filed, with savings from lower litigation costs and less expensive malpractice premiums resulting in lower healthcare costs.

However, three studies have sharply challenged all of these assumptions.

Four researchers—including a University of Texas law professor—concluded that there was no evidence that Texas physicians were leaving the state prior to the 2003 law, or that there was a significant increase in physicians moving to Texas because of better liability climate.

The 2003 legislation, which resulted a 70 percent decrease in medical malpractice claims, limited non-economic damages to $250,000 for a healthcare provider and $500,000 for healthcare facilities. Malpractice claim payouts dropped by more than 75 percent. Insurance premiums fell by about one half.

Gov. Rick Perry, during his failed presidential campaign, claimed that Texas has added 21,000 physicians because of the law. PolitiFact, a news organization that attempts to verify political statements, disputed that figure and the number of practicing physicians was 12,788, and quoted experts who credited the state’s increasing population rather than its liability climate.

The researchers reached much the same conclusion. They pointed out that Perry cited Texas Medical Board (TMB) license applications for his claims. Those figures, they said, do not reflect whether the licensees are actually practicing medicine and ignore the number of physicians who are retiring or leave the state. They said other factors contributed to the increase in physicians, such as Hurricane Katrina relocations.

Researchers relied on data from the Texas Department of State Health Services, which they said begins with TMB data and then makes adjustments to determine the number of physicians directly treating patients. They found that there was no evidence that the number of active Texas physicians is larger than it would have been without tort reform.

They point out that advocates tend to credit every post-reform license to tort reform. However, there was a spike in direct-care physicians after Hurricane Katrina struck Louisiana in 2005. Licenses also do not take into account how many physicians are engage in patient care rather than occupying research or administrative roles. For example, only 39 percent of licensed Texas physicians actively treat patients, a slight decrease from prior to tort reform.

Researchers also noted that the number of licenses do not reflect the number of physicians leaving the state or retiring. They say the increases in licenses may be related to departures, suggesting that new licensees were attracted by job openings rather than tort reform.

Based on their analysis, the number of direct-patient care physicians grew more slowly after malpractice reform—although the researchers acknowledge could have been worse without reform.

“Physician supply appears to be primarily driven by factors other than liability risk, including population trends, location of the physician’s residency, job opportunities within the physician’s specialty, lifestyle choices, and demand for medical services,” the researchers wrote. “For some physicians, malpractice insurance rates and the risk of being sued may be important factors. But for many physicians, other factors matter more.”

Perry criticized the study’s conclusions and argued in a July op-ed column in The Statesman in Austin that tort reform, in fact, had boosted the number of physicians in Texas and charged that Charles Silver, a UT law professor who was one of the researchers, has “close ties to the trial lawyer lobby” and the study was “another in a long line of attacks” against tort reform.

In an interview, Silver said the researchers benefited from the fact that Texas is one of the few states with a robust medical malpractice database. He said an interesting research question would be to explore why more physicians are not attracted to Texas if the cost of doing business is less expensive because of tort reform.

“I think the answer is that one has to assume a static environment for that to be true,” he said. “If I am in New York and threaten to leave to go to Texas, perhaps my salary is raised. Tort reform may make states respond in other ways to make practices more attractive. It is only one of many variables or considerations that affect doctors’ decisions to relocate.”

The same group of researchers also looked at the effect of tort reform on healthcare costs and found no evidence that they fell after 2003. The researchers compared healthcare costs in Texas counties where doctors faced a higher risk of lawsuits with those with a lower risk. The assumption was that physicians in high-risk counties were practicing more defensive medicine prior to 2003, and that fewer unnecessary procedures would be performed after 2003. However, they found that there were slightly more procedures performed in high-risk counties after the law was passed.

In seven categories of risk, Dallas and Tarrant were in the third-highest category while Collin and Denton were in the fourth-highest category.

A third report by non-profit advocacy group Public Citizen in October 2011 echoed the conclusions of both research studies. The report, called “A Failed Experiment,” found that Medicare spending and private insurance premiums both have risen faster than the national average since tort reform.

That group also examined the trend in direct-care physician growth between 1996 and 2010. It found that those physicians grew by more than 9 percent prior to tort reform, and about 4 percent afterward. It also said physician growth in rural Texas fell by 1 percent since reform, after having grown more than 23 percent prior to the law.

Steve Jacob is editor of D Healthcare Daily and author of the new book Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few Doctors and Skyrocketing Costs Are Taking Us. He can be reached at steve.jacob@dmagazine.com.