WHAT’S UP, DOC? NOT THE NUMBER OF PHYSICIANS PRACTICING IN TEXAS
In 2003, the Texas legislature adopted a comprehensive package of tort reforms designed to greatly reduce the frequency of medical malpractice lawsuits, the size of malpractice payments, and physicians’ insurance premiums. Supporters of the reforms contended that if patients’ rights were slashed, access to health care would greatly increase.
Soon after the amendments passed, tort reform groups began trumpeting their success, claiming that doctors are moving to Texas in droves. The Texas Medical Association asserts that “[f]rom May 2003 through July 2005,… more than 3,000 new doctors established practice in Texas.” Dr. Howard Marcus, Chairman of the Texas Alliance For Patient Access—a coalition of doctors, hospitals, nursing homes, health care providers and medical liability insurers that might be more aptly named the “Texas Alliance for Access to Patients”—contends that “[t]he physician growth rate is staggering” and predicts “a record 4,000 new Texas physicians will be licensed” in 2006.
These assertions should be met with skepticism. The annual change in the supply of Texas physicians reflects two factors: the entry of new doctors and the departure of old ones. Because the assertions quoted above ignore physician departures, which occur in large numbers every year, the picture they convey is incomplete. To determine whether the 2003 tort reforms actually caused physician supply to increase, one must examine the total physician population and the net rate at which it changed. When one does, one sees that the 2003 reforms have not improved access to care. In 2004 and 2005, Texas’ doctor population grew more slowly than it did from 1990 to 2002.
Information on the number of Direct Patient Care Physicians practicing in Texas can easily be obtained from the Texas Dept. of State Health Services. Figure 1 shows the total size of this population from 1990 to 2005. The population increased steadily across the period, as can readily be seen. Equally apparent, the rate of increase from 2003 to 2005 is not especially sharp.
Figure 2 shows the annual percentage increase in physician supply and the 2-year percentage increase for the same period. Again, it is obvious that the increases in 2004 and 2005 were nothing to shout about. The population of Texas physicians actually experienced its most dramatic growth from 1997 to 2000, years during which Texas was supposedly building toward or experiencing a liability crisis of epic proportions.
In fact, growth rates for the post-reform years were below the Texas norm, as Table 1 makes clear. From 1990-2002, the number of physicians practicing in the state grew at an average rate of 3.21% per year and 6.71% every two years. In 2004 and 2005, supply grew more slowly, averaging only 1.98% per year and 4.74% over two years. Taking account of exits as well as entries, it is clear that Dr. Marcus’ assertion of “staggering” growth in the post-reform era is false.
It is true that applications for licenses to practice medicine in Texas hit an all-time high in 2006, as Dr. Marcus contends. The Spring 2006 Bulletin of the Texas Medical Board (TMB) appears to be the source for his prediction of 4,000 new licensees. Yet, the number of licenses granted fell considerably short of 4,000, as the Fall 2006 TMB Bulletin reveals. It even fell short of the number of licenses granted in FY2005. In other words, in FY2006 the number of new licenses issued actually declined. The cause appears to be a shortage of trained personnel at the TMB, and a resulting backlog of applications. Evidently, the Texas legislature can’t make up its mind whether it wants more physicians or not. It slashed patients’ legal rights, but then denied them better access to care by under-funding the TMB.
It seems likely that tort reform has increased or eventually will increase access to physicians in rural areas. In an unpublished study, David Matsa, a health economist at Northwestern University, finds such an effect nationwide. The increase occurs in rural counties because in these areas demand for health care is unusually sensitive to price. The effect should be small, however, because malpractice premiums constitute a small and declining fraction of physicians’ real operating costs.
By contrast, that impact of the 2003 reforms on Texas patients’ rights has been enormous, judging from early reports. The 2005 Annual Report of the Medical Liability Benefit Plan for the University of Texas System describes the recent history of medical malpractice lawsuits against all U.T. health care institutions. From 2002 to 2005, new lawsuits fell 55%, from 60 to 27. New claims fell 36%, from 163 to 105. Open claims and lawsuits fell 28%, from 354 to 256. All three drops would be even bigger if one used 2003 as the base year. The recent dramatic increase in the profitability of malpractice insurers and the related declines in doctors’ liability premiums were purchased at the expense of injured patients.
In sum, the 2003 Texas reforms transferred a lot of wealth from malpractice victims, their families, employers, and health insurers to physicians and their liability insurers. This was the main object of the 2003 reforms, and the reforms achieved it. But the reforms have not increased physician supply, which grew at a sub-par rate in the post-reform years. The facts show yet again how wealthy and concentrated interest groups use the political process to advantage, at the expense of groups whose members are anonymous and dispersed.