There is no shortage of examples of medical malpractice litigation where plaintiffs blame doctors for failing to perform a CT scan. E.g., Oct. 2006 and Feb. 2004. This plainly raises costs far more than the direct costs of medical malpractice insurance that you see when the trial bar claims that malpractice reflects only 1-2% of health-care expenses. Tom Baker, among others, argues that defensive medicine has to be viewed as good with bad, because of improved health-care outcomes from the additional care. But not all defensive medicine is positive; it can be irrelevant, or, worse, adversely affects health results.
Malpractice litigation does change doctors' incentives, but only with respect to short-term results. Because doctors won't be sued for long-term consequences of defensive medicine, there is a substantial risk of overexposure to radiation in the course of defensive CT scans—a problem identified in a study in the latest issue of Annals of Emergency Medicine (Winslow, et al., Quantitative Assessment of Diagnostic Radiation Doses in Adult Blunt Trauma Patients; Reuters summary), finding that standard trauma treatment—1005 chest X-ray equivalents—results in an additional 322 cases of cancer per 100,000 treated because of use of CT scans. Earlier: Feb. 2004.