Richard Posner cautions against overstating the benefits of tort reform in health care.
It is always important to distinguish between financial and real costs. Insofar as malpractice liability merely transfers wealth from physicians to (some) patients, aggregate costs are unaffected. The real cost of malpractice liability is limited to the cost of the actual resources consumed by such liability, principally the time of lawyers and expert witnesses (roughly half the total amount awarded in judgments goes to pay lawyers and expert witnesses), unless defensive medicine is assumed to cost more than its benefits in improving treatment outcomes.
My view of medical malpractice lawsuits is that the true economic cost is not large. However, the goal of deterring bad care or weeding out bad doctors is not achieved.
Instead, gathering data on patient outcomes and making consumers aware of which treatments work and which doctors achieve good results would be a much better approach. It probably would cost more, but it would provide more benefits to the public.
For Discussion. What factors keep our current malpractice system from acting effectively against low-quality medical practice?