Professor Charles Silver and a team of researchers from prominent law schools' including Texas and Northwestern, studied the claims of cost savings attributed to the passage of severe tort reform in Texas that limits and caps damage awards for consumers hurt by physicians, hospitals and other health care providers.
The theory was now that physicians are virtually immunized from lawsuits they would stop practicing "defensive" medicine and order fewer medical tests. Since the medical malpractice caps passed in Texas in 2003 there has been virtually no appreciable decline in medical spending levels and, interestingly, some evidence of increased physician spending since the lawsuit limits on damages.
This confirms what we knew already. It is not defensive medicine that increases costs. It is offensive medicine that increases costs. As long as physicians and hospitals get paid more for each procedure and test they do, they will do more. Simple economics. They get paid to test so they test. Fears of lawsuits have nothing to do with it. If you want to reduce the cost of medical care get rid of the blank check that Medicare and others give to physicians, hospital and other providers to get paid more and more as they order and do more and more. My guess: cut down on the unnecessary procedures and you will also see fewer lawsuits.