A Failed Experiment

Health Care in Texas Has Worsened in Key Respects Since State Instituted Liability Caps in 2003

By Taylor Lincoln

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Key Findings
Since Texas Instituted its liability limits in 2003:

  • 􏰀  Medicare spending in Texas has risen far faster than the national average. Per- enrollee spending for Medicare’s two main programs ranked second-highest in Texas among the 50 states in 2009. In 2003, Texas ranked seventh. In light of the steep reduction in litigation that has occurred in Texas since 2003, these figures contradict the theory that medical malpractice litigation is driving health care costs.
  • 􏰀  Medicare spending specifically for outpatient services in Texas has risen even more steeply compared to national averages.
  • 􏰀  Premiums for private health insurance in Texas have risen faster than the national average.
  • 􏰀  The percentage of Texans who lack health insurance has risen, solidifying the state’s dubious distinction of having the highest uninsured rate in the country.
  • 􏰀  The per capita increase in the number of doctors practicing in Texas has been far slower than in the preceding years.
  • 􏰀  The per capita number of primary care physicians practicing in Texas has remained flat, compared to a sharp increase in the years leading up to the caps.
  • 􏰀  The prevalence of physicians in non-metropolitan areas has declined.

Two groups have benefited greatly from the restrictions: medical liability insurance companies and physicians.

  • 􏰀  The state’s largest provider of medical liability insurance advertises that doctors’ premiums (including rebates) were 50.5 percent lower in 2010 than in 2003. But the malpractice payments that insurance companies are required to make have fallen far faster. This suggests that insurance companies have reaped a windfall from the liability caps because the amount they pay out has decreased considerably more rapidly than the amount they take in.
  • 􏰀  Payments on behalf of Texas doctors for malpractice were 64.8 percent lower in 2010 than in 2003. Adjusting for inflation and population growth, payments fell by 74.1 percent.

    But the benefits realized by these two groups have not translated into savings for regular Texans or for the taxpayers who fund Medicare, as the spending data summarized above indicate.