One of the principal arguments backers of tort reform use to justify damages caps is that increased insurance premiums have an adverse effect on health care costs that are passed on to the consumer. This argument persists in spite of the fact that there is little or no evidence that this actually occurs. In California, for instance, caps on medical malpractice damages have been in place for more then thirty years and there has been health care savings passed on to the patient. The Dallas Morning News is reporting this morning that tort reform is not a panacea for health care costs.
In Texas voters were convinced to amend the state constution to impose a $250,000 cap on pain and suffering damage award. Again, caps have failed to lower health care costs. One study, from Dartmouth College, found that health care costs actually rose 24% in the three years after tort reform damages caps were imposed.
Now researchers at the University of Alabama have analyzed health care costs in the 27 states where there is some limit on damages imposed by the legislature, otherwise known as tort reform. They concluded that there is no correlation between tort reform damages caps and decreased costs of health care. In fact the price of health insurance has doubled in those states with damages caps and medicare spending has increased on average nearly 5% a year.