Defensive Medicine, Cost Containment, and Reform

The role of defensive medicine in driving up health care costs is hotly contended. Physicians and health policy experts in particular tend to have sharply divergent views on the subject. Physicians argue that defensive medicine is a significant driver of health care cost inflation. Policy analysts, on the other hand, observe that malpractice reform, by itself, will probably not do much to reduce costs. We argue that both answers are incomplete. Ultimately, malpractice reform is a necessary but insufficient component of medical cost containment. The evidence suggests that defensive medicine accounts for a small but non-negligible fraction of health care costs. Yet the traditional medical malpractice reforms that many physicians desire will not assuage the various pressures that lead providers to overprescribe and overtreat. These reforms may, nevertheless, be necessary to persuade physicians to accept necessary changes in their practice patterns as part of the larger changes to the health care payment and delivery systems that cost containment requires.