The Repeal of Noneconomic Damage Caps and Medical Malpractice Insurance Premiums

Noneconomic damage caps are controversial because they seek to balance uncertain benefits through reductions in physician precautionary costs, against uncertain harms to patient welfare. Opposing policy actions at the state-level reflect this controversy as some states have enacted noneconomic damage caps over the past few decades while others repealed their caps. Our difference-in-differences analyses suggest that repeals increase premiums. These increases are larger after State Supreme Court decisions, affecting all cases in a state, compared with State Circuit Court decisions affecting only specific cases. Magnitudes differ by physician specialty, with larger effects observed in obstetrics/gynecology and general surgery, compared with internal medicine. Our estimates of these repeals are larger than estimates on enactments reported in the literature, suggesting a potential asymmetry between enacting and repealing damage caps.