Working Paper: NBER ID: w24846
Authors: Michael D. Frakes; Jonathan Gruber
Abstract: We estimate the extent of defensive medicine by physicians, embracing the no-liability counterfactual made possible by the structure of liability rules in the Military Heath System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care, while protections are provided to dependents treated at military facilities and to all patients—active-duty or not—that receive care from civilian facilities. Drawing on this variation and exploiting exogenous shocks to care location choices stemming from base-hospital closures, we find suggestive evidence that liability immunity reduces inpatient spending by 5% with no measurable negative effect on patient outcomes.
Keywords: defensive medicine; military health system; malpractice liability
JEL Codes: I11; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Liability immunity (K13) | Inpatient spending (H51) |
| Liability immunity (K13) | Treatment intensity (I12) |
| Malpractice pressure (I11) | Treatment intensity (I12) |
| Liability immunity (K13) | Diagnostic procedures (O52) |
| Treatment intensity (I12) | Patient outcomes (I14) |