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"The Impact of Caps on Damages. How are Markets for Medical Liability Insurance and Medical Services Affected?"

The AMA has a comprehensive review of the economic literature on the subject of the effect of caps, and finds:

The impacts from caps summarized in this report are average effects found in analyses that have implemented statistical controls for other factors (or potentially competing explanations) for the changes being studied. They measure the average impact of caps that were set at different levels and implemented in states with different pre-cap payment (loss) distributions. The actual impact of a cap in any particular state may be higher or lower than the impacts found in this literature.

Clearly, the body of research on the impacts of tort reform shows that caps have resulted in lower growth in medical liability losses in states that passed caps than in states that did not. The more recent literature on premium effects has found that caps result in lower premium growth. And, two very recent papers based on sufficiently many years of the AMA�s Masterfile data have found that non-economic caps and direct tort reforms more generally have a positive effect on the number of physicians per capita in a state.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.