Libertarians and medical malpractice

What kind of medical liability market would emerge if courts decided to begin upholding freedom of contract? I take up that question — and explain some of my misgivings about efforts to portray today’s medical malpractice sector as somehow a free-market arrangement — at Cato at Liberty (& welcome Elie Mystal/Above the Law, GruntDoc, Ramesh Ponnuru readers).


  • You may be right that “[the free-market limit on pain and suffering awards] might well be $0,” but if it happened, I would see it as a triumph of big, bullying business over the little guy.

    What we need is a system where the individual consumer can choose the level of protection he finds necessary, and buy it as insurance, but the insurance industry is so overregulated (and so overtaxed by meritless lawsuit awards) that no such coverage is available. Let’s fix those two problems, starting by enacting loser-pays, and then work out ways to create enough competition with doctors and other professionals so that they have to treat you fairly.

  • Mr. Olson did a great job on his Cato essay linked to above. People, being people, want above average awards but below average premiums/taxes. Right now patients pay for malpractice insurance through direct fees, indirect insurance premiums, or taxes. The cost of lottery awards should be more transparent to the public. Price discovery is an essential element in a market economy.

  • According to a recent article in the journal “Health Affairs,” 59% of all medical malpractice lawsuits are simply abandoned. The out-of-pocket defense costs for these meritless suits averages $25,000, which, of course, does not include the costs of time and stress to the defendant physicians and hospitals. Plus there’s the difficult-to-estimate cost of defensive medicine (CYA stuff such as lab tests, X-rays and consultations undertaken with the risk of lawsuits in mind).

    The overburdened health care system can no longer afford these unnecessary costs. Any true tort reform begins with loser pays.