How much does medical malpractice contribute to health care costs?

There is a long tradition of physicians pointing to lawyers as one of the explanation for the high cost of our health care system.  The Congressional Budget Office weighed in  during 2006, saying that "The estimated effect [on medical utilization] of implementing a package of previously proposed tort limits is near zero." The CBO's regression analyses compared utilization and current malpractice claim limits to reach this conclusion - not a perfect approach since a change in tort limits today might lead to a delayed change in physician behavior.  While the CBO employed risk adjustment, there might have been interstate differences which are not incorporated into the regression model. 

The Massachusetts Medical Society has weighed in with a report suggesting that defensive medicine costs $1.4 billion in Massachusetts alone.  The MMS surveyed physicians in 8 specialties, and extrapolated this from their survey answers.  83% of physicians acknowledged ordering tests at least sometimes to avoid malpractice risk, rather than for clinical necessity.  Survey respondents reported that a total of 13% of hospitalizations and over 1/4 of specialty consultations and high cost imaging tests were not medically necessary - but  done to avoid potential malpractice liability. 

The CBO determined in 2006 that surveys of physicians were not reliable to  ascertain the level of cost of defensive medicine.  Physicians are asked for their subjective estimates off the top of their heads, and they do no chart review to validate their guesstimates.  At least some might sense an advocacy advantage of overestimating the cost of defensive medicine.  I'm especially skeptical of the conclusion that one in eight hospital admissions is motivated by fear of lawyers rather than genuine belief that the patient receives clinical benefit from the hospitalization.  

This is not an endorsement of the current tort system,  which does a poor job of compensating patients who are harmed and causes enormous emotional hardships to many providers.

One addendum.  In today's Boston Globe article, an experienced malpractice attorney is quoted as saying that managed care companies prevented defensive medicine by refusing to pay for any claims that are not medically necessary.  This is an erroneous assumption.  Any managed care company that thought it could second-guess essentially all medical decisions would need far more than 10-12% of premium to administer what would be a cumbersome and universally-reviled administrative system!