The Effects of the Affordable Care Act on Medical Malpractice Claims

  1. Introduction – The Affordable Care Act

On March 23, 2010, President Obama signed a wide-sweeping health care reform plan into law, the Patient Protection and Affordable Care Act (“ACA”).[1] The Affordable Care Act (ACA), also known colloquially as “Obamacare,” was a landmark piece of legislation that changed how millions of Americans obtained healthcare. The primary purposes of the legislation included providing quality, affordable health care to all Americans and improving the quality and efficiency of health care. In addition, the health reform legislation included the Health Care and Education Reconciliation Act, which was signed into law seven days later.[2] This act amended and added provisions to supplement numerous aspect of the act signed one week earlier.

The ACA has been criticized for being overly complex, however, the core nugget of the law is simple and very conservative: create a tax penalty for anyone who did not get health insurance,[3] referred to as the individual mandate. However, the individual mandate created a potential problem for some people who were uninsured and had a preexisting condition, because insurance companies would refuse to cover them. To account for this, the ACA provided subsidies for insurance companies to provide coverage for those  who were uninsured and had a preexisting condition. Using the individual mandate and these subsidies, the ACA has resulted in an estimated 22 million Americans receiving health insurance.[4]

By creating government-run health insurance marketplaces and then requiring people to have health insurance or face a tax penalty, the ACA directly resulted in millions of Americans getting access to health care. However, by radically changing health insurance, the ACA caused ripple effects in how healthcare works in the U.S. This has also changed important aspects of medical malpractice nationally.

The seemingly interminable debates about the ACA and health care reform in the last few years have focused mainly on health care access, quality, and cost. Debates on the medical malpractice component of the issue have focused almost entirely on cost.[5] The familiar arguments in favor of limiting liability include the financial and health costs of defensive medicine; decreased physician supply in certain specialties and geographic areas; excessive awards; and high transaction costs, including attorney and expert witness fees. The equally familiar arguments in favor of maintaining tort liability include the need to promote civil justice, deter substandard care, identify incompetent practitioners, and encourage systemic quality improvement. There is a complicated and nonlinear relationship between medical malpractice events, medical malpractice claims, and medical malpractice costs.[6]

  1. The Medical Malpractice Landscape

It is routinely reported that “one of every 100 hospital patients suffers negligent treatment, and that as many as 98,000 die each year as a result,”[7] with the economic burden of preventable medical injuries set at $17-$29 billion per year.[8]  Alternatively, a 2011 study of medical malpractice lawsuits across 25 specialties reported that 1 in 4 US physicians is sued each year.[9]

At the same time, the direct cost that health care providers incur from medical malpractice liability is asserted to be in the tens of billions of dollars each year, with two notable estimates being $10 billion (combining indemnity payments and administrative expenses).[10] When the effects of using defensive medicine to avoid liability are taken into account, this amount rose to $55.6 billion in 2008 dollars[11] and $35 billion (combining malpractice insurance premiums with settlements, awards, and administrative costs not covered by insurance, an amount calculated to be about 2% of total health care expenditures).[12] Whether or not these figures are accurate, they and other estimates have garnered a great deal of attention.[13]

In the twelve years since the Institute of Medicine released its sobering To Err Is Human report, which detailed America’s grim track record on patient safety and preventable iatrogenic injuries, significant efforts have been made to improve the quality of the care patients receive and to address the causes of both medical malpractice and malpractice suits.[14]

Indeed, despite continuing population growth and the increasing number of medical procedures performed, the absolute number of medical malpractice claims filed has dropped substantially since the report was released.[15]  Numerous studies have investigated the needs of injured patients and the reasons they file lawsuits against their health care providers, with efforts made at all levels of the health care system, from private institutions to state laws, to address the concerns of both patients and providers, often with an emphasis on avoiding recourse to the courts.[16]  

Nevertheless, the cost of physicians’ malpractice insurance premiums rose significantly in the first half of the last decade despite purported improvements in the quality of care they delivered and either static or decreased levels of awards in malpractice suits.[17] Whatever the reason for these rate increases, they generated, as they have previously, the perception among health care providers of a malpractice liability crisis fueled by the litigiousness of patients (driven by greedy plaintiffs’ lawyers) and outsized awards made by juries.[18]

As has also happened in the past, this perceived crisis triggered renewed calls for tort reform to limit medical malpractice suits, which in turn, it was believed, would ultimately reduce the malpractice premiums of health care providers.[19] But such calls for reform are not the only consequences of a perceived medical malpractice liability crisis. It is frequently asserted that physicians, out of fear of potential liability, engage in what has come to be known as “defensive medicine”–orders for tests and treatment that contribute to significant cost, are of dubious medical value yet are thought to protect physicians from future lawsuits by defusing arguments that they acted negligently in failing to order a given procedure.

Proponents of malpractice liability reform often contend that significant savings in health care expenditures could be obtained if physicians did not feel obligated to order these unnecessary procedures to protect themselves from liability. While estimates vary widely, researchers at Harvard University recently placed the cost of defensive medicine at $45.6 billion per year (based on the year 2008), or roughly 2% of the nation’s health care spending.[20] Unfortunately, the ACA does not provide any of the medical malpractice tort reforms needed to reduce wasteful expenses caused by the practice of defensive medicine.

  1. Impact of the ACA on the Business of Healthcare

The impact of the ACA on the U.S. medical malpractice system is relatively unknown, due to: (1) the lack of direct impacts; (2) the ACA’s insurance provisions not becoming effective until 2014; and, (3) medical malpractice insurance being based on a historical “tail” method, i.e., the allowance of claims to be reported to an insurer of an expired policy. Notwithstanding, the impact of the ACA may be categorized by its direct impacts and indirect impacts.

  1. Direct Impact of the ACA on Medical Malpractice

The only part of the ACA that directly says anything about medical malpractice is §10607, which allows the Secretary of Health and Human Services to provide grant money to state governments to develop, implement, and evaluate ways of handling the issue. This is the most direct impact of the ACA on medical malpractice law. Money was earmarked for state programs to explore alternatives to current tort law as it relates to medical malpractice.

States that want to receive grant money must develop a program that reduces medical errors by “encouraging the collection and analysis of patient safety data related to disputes. Although the pilot programs were not expected to result in major sweeping changes, their goals directly targeted some of the most pressing issues in the health-care system, such as resolving disputes efficiently, reducing medical errors, and enhancing patient safety. They also aim to “improve access to liability insurance” and show patients alternatives to filing lawsuits.[21]

However, as of April 2017, HHS has not utilized the full $50 million in grants, and many of the grant programs failed to show a decrease in malpractice rates, greatly lessening the direct effects of the ACA on current malpractice rates.[22] As of now, the ACA does not appear to have had much of a direct impact on malpractice risk.

  • Indirect Impact(s)

The ACA was predicted to increase malpractice litigation due to the indirect impacts of the other substantive changes the law will bring to the nation’s healthcare system. The ACA includes dozens of details covering everything from children’s access to new tax regulations for prescription medication.[23]

The changes cost billions of dollars in taxpayer funds, but they stood to address five of the most pressing problems in healthcare that affect malpractice litigation: the burden of uninsured patients on hospital emergency rooms; the large number of Americans who lack health insurance; the need for better electronic medical records; the growing disconnect between the cost of medical care and the quality of that care; and a lack of regulations for the insurance industry.[24]

Millions of newly insured patients will alter the pattern of malpractice lawsuits because more people will be receiving medical care, and some of that care will be negligent. This expansion of insurance coverage —from both Medicare and from sources such as the individual mandate—is predicted to send ripples into the malpractice industry that extend far beyond emergency rooms. For example, one area where the ACA could affect physicians is in preventive care for pregnant women. If fewer people are uninsured, especially the young and healthy, there is a greater chance that those people will receive earlier diagnosis and treatment, particularly when it comes to prenatal care, which will lead to fewer adverse outcomes such as birth injuries.[25]

The expanded number of insured patients also translates into an increase in the rate of non-physicians providing medical care to patients. This is partly due to the ongoing shortage of primary-care physicians.[26] The impact of this trend might cut in two directions. On one hand, it could mean lower malpractice rates if the physician shortage is relieved, but on the other hand it could lead to an increase in bad outcomes due to a lower level of training among non-physicians and more diagnostic errors.[27] The interaction of the ACA with this trend is difficult to gauge either way. With or without the ACA, the trend in increased non-physician providers has occurred because of market forces and consumer demand.[28]

Expanded insurance coverage could have led to more malpractice litigation due to the sheer number of additional patients receiving care, and the added stress on the medical system. The actual outcome, however, does not appear to have been the case.[29]

  1. The Dilution of the Doctor/Patient Relationship

One indirect impact of the ACA on medical malpractice was incentivizing provider consolidation and self-insurance within the industry.[30] This represents a change to the business model that healthcare providers used. Before the ACA, it was both feasible and lucrative for doctors to stay independent and organize in small clinics and offices. After the ACA, this was not as lucrative. Many independent clinics sold out to larger health institutions and hospitals, in large part because the healthcare model used by these larger institutions – the accountable care organization – was more efficient. Under the accountable care organization model, individual doctors focus on functions in the healthcare process, rather than on patients. From a doctor’s point of view, this means they do substantially the same thing every day, allowing them to specialize more easily.[31]

However, from a patient’s perspective, the accountable care organization means there is little “continuity of care,” where a patient sees the same doctor for all of their maladies and for the entire process of fixing one of those maladies. Instead of seeing and building a rapport with a doctor, patients are more likely to see several doctors over the course of a single diagnosis, treatment, and recovery.

The Accountable Care Organization model creates a new set of risks for the medical malpractice insurance companies. Patients gradually lose contact with the doctor because of the lack of continuity of care. As a result, he is more likely to sue because he is less emotionally and physically attached to his treating physician, thereby giving way to more medical malpractice claims.

As the number of private medical practices decreases, as hospitals buy up practices and take on their risk, medical malpractice insurance companies will compete heavily for the remaining private practice business. And malpractice companies that insure the deep-pocketed hospitals could face massive lawsuits similar to the ones faced in the asbestos lawsuits of the last couple of decades.[32]

  • Potential Increase in Malpractice Claims

Upon the 2010 passage of the ACA, the number of malpractice claims was expected to increase as more individuals gained health insurance coverage. According to a study conducted by the RAND Corporation, a nonprofit global policy think tank, medical malpractice claims could rise 5 percent due to the increased number of newly insured patients after the implementation of the ACA.[33] The potential rise in malpractice claims is not estimated to come from doctor error, but from an increased number of insured patients, which means a higher number of interactions and procedures and more opportunities for patients to sue.[34] Consequently, the RAND report estimated that the number of liability payments in medical malpractice actions would increase by 3.4 percent.[35] However, according to the2016 Annual Rate Survey Issue, claim frequency levels are at “historic lows [with] little-to-no evidence of a significant upward trend in the near future.”[36]

It remains unclear whether this depressed claim frequency actually reflects decreased numbers of medical malpractice lawsuits, although it may be attributable to the efforts by states over the past 40 years to limit noneconomic damages for this type of litigation, which may, in part, disincentive plaintiff attorneys, who work on a contingency fee basis, from assuming the risk of representing a client in a case that will only result in a certain (i.e., capped) amount of damages.[37]

Prior to ACA implementation, future medical costs comprised the bulk of damages in malpractice cases, due in part to the inability of plaintiffs to find insurance as their resulting disability qualified as a preexisting condition, barring them from obtaining insurance coverage and significantly increasing their out-of-pocket expenses.[38] Before the passage of the ACA, references to the plaintiff’s future medical insurance were off limits. Judges typically precluded mention of future health insurance as speculative.

Recently, some courts are hearing defense arguments to limit damages to future insurance limits, or are allowing defendants to pay only the future insurance out-of-pocket amounts for a harmed plaintiff rather than the future health costs.[39] Other states, including Minnesota, Illinois, Alabama, Michigan, New York, and Washington, have expressly disallowed this new remedy based on the collateral source rule, which allows plaintiffs to recover damages regardless of insurance recovery. The collateral source rule provides that “payments from a collateral source shall not diminish the damages otherwise recoverable from the wrongdoer.” This rule was intended to avoid precluding a claimant from obtaining redress for his or her injury merely because coverage for the injury was provided by some collateral source.[40]

In some states, the intersection of the ACA and the collateral source rule has especially affected the medical malpractice field. An increasing number of insured are able to collect twice for their future medical expenses—once when their health insurance provider pays the plaintiffs’ medical bills, and again when defendants pay these same bills.

The recent decision in Cuevas v. Contra Costa County (2017) 11 Cal.App.5th 163, addressed whether ACA-mandated health insurance benefits should be admissible as evidence of future medical damages in medical-malpractice cases. Cuevas held that future medical damages, like past medical damages, can be measured by discounted insurance prices for care (considered to be “market rates”). Further, it held that the prices for medical services under ACA-based medical insurance plans may be admissible as evidence of the value of future medical damages. The Cuevas court generally reasoned that the ACA is now the law of the United States, and since the ACA is 1) mandatory, 2) defines certain medical insurance benefits, and 3) has specific prices, the ACA can be reliably used as evidence of a plaintiff’s future medical costs. This conclusion is incorrect, principally because it relies on the shaky foundation of the ACA’s durability and ability to guarantee stable prices over time. This conclusion partially abrogated.

Is this decision justified? Denying Plaintiffs future medical costs is against public policy. Doing so would effectively shift the burden of payment of additional health costs onto public health insurance rather than liable medical providers. This shifts the costs onto both the injured plaintiff, to the extent that they pay health premiums in the ACA or additional taxes under single-payer, and onto the taxpayers, to the extent plaintiffs receive government subsidies.

  • Medical Liability Costs Are at or Near the Lowest Levels on Record

The federal government maintains a database of medical malpractice payments made on behalf of doctors since mid-1990. In the life of that database, these payments have never accounted for more than a small percentage of healthcare costs, and that percentage is declining. In 2015, the most recent full year for which data are available, medical malpractice payments on behalf of doctors amounted to about 0.2 percent of costs for hospital and physician services and about 0.1 percent of all healthcare costs. The number of payments on behalf of doctors in 2015 was the lowest on record.[41]

Medical liability insurance premiums paid in 2015 were at their lowest level since (and including) 2003, the earliest year for which such data are provided by information-services company A.M. Best. National medical liability premiums have fallen for nine consecutive years. Medical liability premiums equaled about 0.3 percent of national healthcare costs in 2015, and about 0.5 percent of the portion of healthcare costs consisting of hospital and physician services.[42]

Most studies on defensive medicine have concluded that cases of doctors rendering extra care solely to protect themselves against potential litigation are relatively rare. Studies that have attempted to put a price on the cost of defensive medicine have usually estimated it to be less than 2 percent of healthcare costs.[43]

National medical liability costs have declined over the past decade, but healthcare costs have continued to rise. Malpractice payments declined by 22 percent from 2003 to 2015 and medical liability insurance payments declined by 15 percent. National healthcare costs, meanwhile, rose by 81 percent.[44] This contradicts the notion that reducing medical liability will lower healthcare cost. National litigation costs have steadily declined while healthcare costs have steadily risen.

  • Conclusion

This report illustrates that the ACA, whether directly or indirectly, has not increased the costs associated with medical malpractice. Costs relating to litigation are far too small to have a significant influence. Claims surrounding “defensive medicine” are more difficult to assess because there is no tangible marker to reveal its existence. Any claim that medical liability is responsible for rising healthcare costs falls apart when one considers that liability costs and healthcare costs are moving in opposite directions.

Most calls to limit physicians’ liability are premised on an assumption that the bulk of medical malpractice claims lack merit or, put more bluntly, are “frivolous.” But evidence suggests that the injustice runs in in the opposite direction. Several times as many patients are killed or injured by medical errors than the number of patients and survivors who file malpractice cases, let alone receive compensation. In my view, policymakers concerned with litigation should concentrate on the epidemic of injuries and fatalities due to avoidable errors that leads to litigation. They should encourage solutions to these problems. Regardless, the political pressure for medical malpractice reform will likely persist.[45] As the medical malpractice debate continues, it will be important to assess the effects of health care reform on medical malpractice events, claims, and costs.

Before the ACA, courts in malpractice cases were reluctant to allow evidence of future health insurance benefits, primarily because there was no foundation for assuming these benefits would be available or would reliably provide low prices for care. After the Cuevas decision, defendants can now argue that, because of the ACA, future insurance benefits are reasonably certain and should be admissible. However, the ACA’s core provisions have come under a series of partisan attacks. As a result, the ACA may not be a reliable guarantor of a plaintiff’s future medical benefits.

[1] Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) (codified at 42 U.S.C.A. §§ 18001 to 18031 (2010)).

[2] The Health Care and Education Reconciliation Act, Pub. L. 111-152, 124 Stat. 1029 (2010).

[3] Summary of the Affordable Care Act, KAISER FAMILY FOUND. (Apr. 25, 2013)

[4] About the Affordable Care Act. (2017, December 7);

[5] See, e.g., Mello MM, Chandra A, Gawande AA, Studdert DM. National Costs of the Medical Liability System. Health Affairs. 2010;29(no. 9):1569–1576.

[6] See Sage WM, Kersh R, editors. Medical Malpractice and the U.S. Health Care System. New York: Cambridge University Press; 2006. 

[7] Kevin Sack, Doctors Say ‘I’m Sorry’ Before ‘See You in Court’, N.Y. Times, May 18, 2008,; see also Carolyn M. Clancy, Patient Safety and Medical Liability Reform: Putting the Patient First, Patient Safety & Quality Healthcare, Sept.-Oct. 2010, at 6 (“More than 15 percent of patients receiving hospital care are harmed by the process of care they receive.”) (citing Agency for Healthcare Research & Quality, National Healthcare Quality Report (2009)).

[8] Michelle M. Mello, Amitabh Chandra, Atul A. Gawande & David M. Studdert, National Costs of the Medical Liability System, 29 Health Aff. 1569, 1570 (2010).

[9] Jena AB, Seabury S, Lakdawalla D, et al. Malpractice risk according to physician specialty. N Engl J Med. 2011;365:629-636.

[10] Id.

[11] Id.

[12] Letter from Douglas W. Elmendorf, Dir., Cong. Budget Office, to Senator Orrin G. Hatch (Oct. 9, 2009), Health care providers may also incur significant indirect and psychological costs.

[13] See, e.g., Jennifer Arlen, Contracting Over Liability: Medical Malpractice and the Cost of Choice, 158 U. Pa. L. Rev. 957 (2010); Theodore R. LeBlang, Medical Malpractice Crisis–Is There a Solution?, 27 J. Legal Med. 1 (2006).

[14] Nancy Berlinger, After Harm: Medical Error and the Ethics of Forgiveness 11 (2005); see also Michael D. Greenberg, Amelia M. Haviland, J. Scott Ashwood & Regan Main, Is Better Patient Safety Associated with Less Malpractice Activity: Evidence from California 1-19 (2010) (showing a significant correlation between the frequency of adverse events and malpractice claims).

[15] Paul J. Barringer, David M. Studdert, Allen B. Kachalia & Michelle M. Mello, Administrative Compensation of Medical Injuries: A Hardy Perennial Blooms Again, 33 J. Health Pol’y & L. 725, 725 (2008).

[16] Albert L. Strunk & John T. Queenan, Beyond Negligence: Administrative Compensation for Adverse Medical Outcomes, 115 Obstetrics & Gynecology 896, 896 (2010);

[17] J. Robert Hunter, Gillian Cassell-Stiga & Joanne Doroshow, Americans for Insurance Reform, True Risk: Medical Liability, Malpractice Insurance and Health Care 14 (2009), available at

[18] See, e.g., Richard G. Roberts, Understanding the Physician Liability Insurance Crisis, Fam. Prac. Mgmt., Oct. 2002, at 47 (2002) (“The most important factor in rising medical liability premiums appears to be the size of the awards.”).

[19] See Opinion, The Malpractice Insurance Crisis, N.Y. Times, Jan. 17, 2003, crisis.html?scp=1&sq=The%20Malpractice%C20Insurance%20Crisis&st=cse.

[20] See Aaron Carroll, Meme-Busting: Tort Reform = Cost Control, Wash. Post, June 2, 2011, 

[21] ACA, Public Law 111-148 § 10607

[22] Pillen, Michelle, “Longitudinal Evaluation of the Patient Safety and Medical Liability Reform Demonstration Program,” Report For Agency for Healthcare Research and Quality, May 2016,

Click to access psml-demo-grants-final-report.pdf

[23] See (outlining new rules for health coverage of children who are receiving hospice care.

[24] Laura Ungar, Soaring Demand from Uninsured Puts University Hospital Emergency Room on Brink of Overload, THE COURIER-JOURNAL (Louisville, Ky.), Feb. 26, 2015, at A1 (noting that while the new law brings potential relief to hospitals, it also is uncertain if the benefits will be offset by cuts in government funding for the care of indigent patients).

[25] Edward M. Wrobel & Jeffrey Levin Scherz, U.S. Healthcare Reform, CAPITAL REVIEW at 44, December 2010

[26] Id.

[27] Id.

[28] See, e.g., Christopher Burkle, The Advance of the Retail Health Clinic Market: The Liability Risk Physicians May Potentially Face When Supervising or Collaborating With Other Professionals, MAYO CLINIC PROC. 1086 (2011).

[29] Mary Elizabeth Dallas, Poor Patients Less Likely to Sue Doctors, Analysis Shows, HEALTHDAY, Feb. 28, 2012, available at

[30] Greve, Paul Greve, JD, Milford, Alison Milford “Do Still Waters Still Run Deep? Medical Professional Liability in 2016,” Medical Liability Monitor, Vol. 41, No. 10 (October 2016) p. 6.

[31] Id. at 6.

[32] “Casualty Actuarial Society Session Debates Potential Medical Professional Liability Implications of PPACA” Medical Liability Monitor, Vol. 39, No. 7 (July 2014), p. 4

[33] “How Will the Patient Protection and Affordable Care Act Affect Liability Insurance Costs?” By David I. Auerbach et al. RAND Corporation, 2014, p. 30.

[34] Hadley, Jack, “Insurance Coverage, Medical Care Use, and Short-Term Health Changes Following an Unintentional Injury or the Onset of a Chronic Condition” JAMA, Vol. 297, No. 10 (March 14, 2007), p. 1080.

[35] Id. at 31.

[36] “Longitudinal Evaluation of the Patient Safety and Medical Liability Reform Demonstration Program” By Michelle Pillen et al., Report For Agency for Healthcare Research and Quality, May 2016,

Click to access psml-demo-grants-final-report.pdf

(Accessed 4/13/2017) p. 1.

[37] Id. at 7.

[38] Mehlman, Maxwell, “Compensating Persons Injured by Medical Malpractice and Other Tortious Behavior for Future Medical Expenses Under the Affordable Care Act” Annals of Health Law, Vol. 25, No. 35 (2016), p. 35.

[39] “The Affordable Care Act is Not Tort Reform” By Andrew F. Popper, Catholic University Law Review, Vol. 65, No. 1 (2015), p. 3-4; “Thwart the Assault on Future Medical Expenses” By Seth Cardeli, TRIAL Magazine, (May 2014),

Click to access Thwart-the-Assault-on-Medical-Expenses_SethCardeli.pdf

(Accessed 4/20/2014). 

[40] See, e.g., Beechwoods Flying Service, Inc. v. Al Hamilton Contracting Corp., 476 A.2d 350, 352 (Pa. 1984); see also, id. at 353 (the rule is intended to prevent a wrongdoer from taking advantage of the “fortuitous existence of a collateral remedy”).

[41] The Medical Malpractice Scapegoat (published February 28,2017).

[42] Id.


16 Frank A. Sloan and John H. Shadle, Is There Empirical Evidence for ‘Defensive Medicine’? A Reassessment, 28 JOURNAL OF HEALTH ECONOMICS 481 (March 2009),;

17 Katherine Baicker, et al., Malpractice Liability Costs and the Practice of Medicine in the Medicare Program, HEALTH AFFAIRS (May-June 2007),

18 Limiting Tort Liability for Medical Malpractice, CONGRESSIONAL BUDGET OFFICE (Jan. 8, 2004); 19 David P. Kessler and Mark McClellan, Do Doctors Practice Defensive Medicine, 115 QUARTERLY JOURNAL OF ECONOMICS 577 (March 1, 1996).

[44]Medical Professional Liability Reform” Medical Liability Monitor, Vol. 42, No. 4 (April 2017) p. 1.

[45] See Carrier EC. Physicians’ Fears of Malpractice Lawsuits Are Not Assuaged by Tort Reforms. Health Affairs. 2010;29(no. 9):1585–1591.

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