Report: Ohio’s Medical Liability Reform Lowers Costs

Published May 31, 2016

A report released by Ohio’s Department of Insurance shows the state has realized significant benefits since state-level medical malpractice reforms in 2003 put a $350,000 cap on noneconomic damages.

The report details a 21 percent drop in medical liability-related lawsuits between 2005 and 2006 and a 14 percent drop in closed claims between 2006 and 2007. Fully 80 percent of the closed claims in 2007 yielded no payouts to plaintiffs, and the cases that did result in payouts had 10 percent higher payouts than the year before.

Positive Effects of Tort Reform

Jason Koma, communications director for the Ohio State Medical Association, notes the similarity of the Ohio reforms to those in Texas, which he says have led to a surge in the number of doctors practicing medicine in each state.

“Ohio has had tort reform similar to Texas’ for a number of years now,” Koma said, “and it has had the same positive effect.”

But Professor Thomas Wickizer of Ohio State University says it’s too early to conclude the cost reductions were a result of reform..

“I think research has not consistently shown that the threat of medical malpractice is the most important determinant of medical cost inflation, even though from a commonsense view many physicians would point to it as a reason for the practice of defensive medicine,” Wickizer said. “It is not the only reason.”

Reforms Bear Fruit

Karly Blick of Ohio’s Department of Insurance notes the 2003 reforms came about as a response to decades of legal and financial losses from Ohio’s medical insurers. Although she acknowledges the data is not all in yet—the department does not record data tracking the increase in risk-management in doctor’s offices—she says the reform is allowing greater efficiency among health providers.

“There has been a lot of turmoil in the medical liability for market for insurers. They have had decades of losses, and it was not until recently that they finally returned to profitablity with rates stabilizing here. However, the tort reform in 2003 which instituted a noneconomic cap and a 2005 regulation requiring Med-Mal insurers to justify their rates every year have helped,” Blick said. “Because of these reforms, the system is now more efficient, it is now improving, and it is ensuring more due diligence on everyone’s part.”

Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.