http://ijh.sciedupress.com International Journal of Healthcare 2016, Vol. 2, No. 2 ORIGINAL ARTICLES Caps on noneconomic damages’ effect on the number of paid malpractice claims in various American states David B. Muhlestein *1, 2 , Abigail Shoben 1 , Thomas Wickizer 1 1 The Ohio State University College of Public Health, Columbus, Ohio, United States 2 Leavitt Partners, Salt Lake City, Utah, United States Received: February 4, 2016 Accepted: April 17, 2016 Online Published: May 27, 2016 DOI: 10.5430/ijh.v2n2p45 URL: http://dx.doi.org/10.5430/ijh.v2n2p45 ABSTRACT Background: Tort reform with caps on noneconomic damages, such as pain and suffering, has been proposed as a way of decreasing the national cost of healthcare in the United States. In this paper we measure the impact of noneconomic damage caps at the state level. Methods: Changes in the rate of paid claims are estimated using an interrupted time series design which identifies changes in trends following the implementation of an intervention. Data from the National Practitioner’s Data Bank are used to create yearly trends in state malpractice claims using a linear spline model with a knot at the year that noneconomic caps were implemented to estimate the effect of the noneconomic caps. The effect of statutes of limitations are also modeled with a spline model. Finally, a difference-in-difference design matches states that instituted or significantly changed noneconomic caps to states that did not. Findings: Of the fifteen states that implemented caps on noneconomic damages or significantly changed their caps since 2000, two had statistically significant differences in the absolute number of paid claims and six had significant changes to their trend of paid claims. Conclusions: Tort reforms that address caps on noneconomic damages, though facially similar, have significantly different results when implemented in individual states. Qualitative studies of the individual state policies need to evaluate how the state policies differ and why they led to different results to direct other states and the federal government as they consider similar policies. Key Words: Malpractice, Tort reform, Noneconomic damages, American healthcare 1. BACKGROUND The cost of healthcare has become a significant financial burden for the United States. Tort reform has been pro- posed as a means of lowering its growth. [1–5] Proponents believe that this will lower costs in two ways: (1) by lower- ing malpractice premiums [6] and (2) by decreasing defensive medicine. [7] The former concept infers that the high costs of insuring against malpractice lead to physicians transferring those costs to patients and insurers. The assumption is that if physicians have lower premiums they will also be willing to lower their prices. The latter way is based on the belief that physicians, due to a desire to not be sued, will order exces- sive tests, procedures and care on the chance that the patient has a serious illness. This is particularly believed to result in higher service utilization among high-risk specialties (such as emergency department physicians and obstetricians) [8] and higher rates of diagnostic imaging. [9] Various versions of tort reform have been implemented in different states, but * Correspondence: David B. Muhlestein, PhD JD; Email: david.muhlestein@leavittpartners.com; Address: 299 S Main St, Suite 2300, Salt Lake City, UT 84087, United States. Published by Sciedu Press 45