I have gone ahead and posted this comment submitted by Ted Frank (American Enterprise Institute) to Professor Silver's text only response to Ted'scomment on his orignal post.

(http://www.tortdeform.com/archives/2006/11/whats_up_doc_not_the_number_of.html#comments)

Ted Frank's comment is below.....

Thank you, Professor Silver, for providing additional data.

You acknowledge that, under reform, doctors come out ahead. (This is appreciated: there are numerous dishonest/disingenuous opponents of reform, including several who write on this website, who argue nonsensically that malpractice insurance rates are unrelated to the expense of providing malpractice insurance. We are to believe, under these arguments, that the doctors who run nonprofit mutual insurance companies are conspiring to charge themselves too much money.) Under normal laws of supply and demand, ceteris paribus, the increased financial incentives will increase the supply of doctors.

Of course, ceteris isn't paribus: when one goes to measure this, there are confounding variables; one can't simply plot a single variable with fifteen data points, and claim that this demonstrates anything. (It's perhaps too much to expect a lobbyist group's talking points to be this nuanced, but, you and I, as academics, surely aspire to more than simply creating competing talking points.) For example, during the crisis period, as the number of doctors went up in Texas, it went up in the rest of the United States as well. In fact, the number of doctors went up in the rest of the United States faster than it went up in Texas, even as the population of Texas went up faster than it did in the rest of the United States. One thus needs to control for these confounding variables.

Numerous studies have shown, that when other variables are controlled for, noneconomic damages caps do increase the supply of doctors. (Klick and Stratmann (2005); Kessler, Sage, and Becker (2005); Matsa (2005); Dranove and Gron (2005); Dubay, Kaestner, and
Waidmann (2001); Mello et al (2005); Klick and Stratmann (2007 forthcoming)). The effect is especially pronounced when one observes "high risk" professions such as ob-gyn, emergency medicine, and neurology; doctors in low-risk fields such as dermatology are obviously going to care less about the malpractice regime they practice in, and including doctors relatively unaffected by a liability regime in the mix of data only dampens the real effects. And a single time-series for a single state, as you would surely admit, does not show otherwise.

What your additional data shows, however, is not that liability reform did not create additional willingness for doctors to practice in Texas, but that confounding factors, such as excessive regulation, are preventing the market from reaching its equilibrium point as quickly as it would otherwise. That's not an argument against reform, that's an argument for a better regulatory regime irrelevant to the liability process. In other words, the Texas doctors' groups you cite are guilty of a non sequitur and failing to address another problem in the medical regulatory regime, but the thrust of their comments regarding the effects of liability reform are both correct and consistent with your own acknowledgement that doctors' lots are improved by reform.

I didn't note this earlier, but it's rather misleading to claim that the public choice scenario behind malpractice reform is "wealthy and concentrated interest groups use the political process to advantage, at the expense of groups whose members are anonymous and dispersed." You're surely well aware (from, if nothing else, being a personal beneficiary from pronouncing on the ethics of its lead practitioners) that the organized trial bar is about as wealthy and concentrated an interest group as there is, and that interest group has spent millions calling in chips to block reforms that a majority of the U.S. House of Representatives and Senate supported, and had considerable success blocking reforms in Texas through obstruction in one or more of the three branches of government before the referendum process permitted the popular will--the mass of anonymous and dispersed voters--to finally have its way over the powerful wealthy and concentrated interest group.

You ask me to back up my assertion that the median Texan comes out ahead. There are many reasons, but the easy one is that, empirically, when given the choice of paying for services with or without the additional cost of expected noneconomic damages, consumers overwhelmingly prefer (ex ante) not to pay those costs. New Jersey auto insurance is a marvelous example: there, when they buy auto insurance, residents are given the choice of whether they want full access to the liability system, or whether they are willing to waive their rights to noneconomic damages in certain accidents in exchange for a lower insurance rate. Over ninety percent prefer lower costs ex ante to the opportunity for pain and suffering damages ex post. The revealed preferences of the larger group of "anonymous and dispersed" consumers are that they don't think the trial-lawyer-created game of randomly awarded noneconomic damages (where lawyers and administration costs receive the majority of the money spent) is worth the candle. This alone, without more, shows that there has been an increase in consumer surplus because their preferences have been honored.

There is more evidence, of course, but it's haggling over econometric studies over the health benefits of caps, and I've already gone off topic enough.

Best,

Ted

Before addressing the substance of Ted Frank’s follow up post, I note that in it and his first post he mainly attempts to change the subject. My column assessed the accuracy of claims tort reformers have made in the public arena about the change in the number of doctors practicing in Texas. These statements, of which there are many, assert that since 2003 Texas’ physician population has grown especially fast. These claims turn out to be false when the total number of doctors practicing in Texas is considered.

Frank doesn’t want to talk about these statements. Instead, he wants to talk about the more nuanced claims academics have made (or might make) on the basis of studies that control for confounding variables. This is a conversation worth having—but it is a vastly different conversation from the one tort reform advocates are having with the public. An academic might say, for example, that although physician supply is increasing in all states, the rate of growth in states with certain tort limitations is 3% (or 5% or what have you) higher than in other states. That kind of statement doesn’t get most people excited, however, because it does not inspire fears of denials of care. (“You’re telling me I’ll have more doctors, right?”) So, tort reform advocates scare people by telling them that unless they support anti-lawsuit legislation, they’ll lose access to their doctors. In fact, they’ll have greater access. The studies don’t show that access declined; just that it increased at a slightly lower marginal rate. In the public debate, slower growth gets spun into a critical loss of care.

On the subject of licensing, Frank writes that the bottleneck at the Texas Medical Board (TMB) “is not an argument against reform, [but] an argument for a better regulatory regime irrelevant to the liability process.” Irrelevant? How can a fact that bears on the success of a policy be irrelevant to its desirability? At the very least, one ought to conclude that tort reforms unaccompanied by increased funding for TMB (or other change in the regulatory apparatus designed to allow more doctors into Texas) are likely to be less successful than billed.

Frank’s claim that “the Texas doctors' groups [I] cite are guilty of a non sequitur and failing to address another problem in the medical regulatory regime,” is itself a non sequitur.

To see this, one need only realize that many policies have the potential to increase physician supply, and that tort reform may be the least successful among them. For example, in 2005 the USAToday reported that “[f]or the past quarter-century, the American Medical Association and other industry groups have … worked to limit the number of new physicians.” Supposedly, their aim was to avoid a glut of doctors. A skeptic might wonder whether they really sought to limit competition. On reading an article published in the New England Journal of Medicine in 2004, I gained the impression that the regulation of physician supply is the closest thing the U.S. has to socialist central planning.

If the object is to increase physician supply, why select tort reform as the means rather than a policy of loosening the industry’s control of supply? The real non sequitur isn’t that doctors’ groups forgot about the TMB but that they chose a 2nd- 3rd- or nth-best approach to solving the physician shortage. If they claim to want to improve patients’ access while also maintaining barriers to entry, that’s not (only)illogical, it's hypocritical.

Finally, Frank makes many other points that are worth discussing, such as his assertion that the trial bar is as wealthy and concentrated an interest as any other.

However, these points lie very far distant from my main point, and I don’t have time to respond.

Professor Silver,

Perhaps your intent was solely to show that a lobbyist group made a relatively unpublicized statement that was imprecise. (You don't question my characterization that the thrust of their argument is correct.) But your conclusion seems to seek a much more aggressive position: "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."

These statement are false, and you choose not to defend them.

You'll get no argument from me about the problems caused by socialist-style central planning. Medicine in this country would certainly benefit from more market-oriented mechanisms (though a couple of your co-bloggers here regularly argue for making things more socialist-style). But liability reform is hardly mutually exclusive from these other reforms. EMTALA, for example, created new legal causes of action that has hurt medical care in this country.

There are real issues of access to care that are not being captured by your single time-series. For example, if doctors are spending less time with lawyers and more time practicing medicine, that increases patient access without changing the raw numbers you identify. If doctors are substituting legally safer practices for matters like obstetrics and emergency medicine, the number of doctors does not change, but the access to care certainly does.

The number of doctors has been growing over the last fifteen years because medicine can do more today than it could fifteen years ago. So, indeed, if doctor growth is slower than it would be, that does affect access to care. The Texas Department of State Health Services says that "Texas has been experiencing shortages of many types of health care providers for years. This is supported by the fact that, for most professions, the supply ratios for Texas (the number of providers per 100,000 population) have been consistently lower than the U.S. average ratios for decades.... For example, as of March 2006, 118 of Texas’ 254 counties (46%) were designated as [Health Professional Shortage Areas] for primary care."

In short: the doctors' organizations you are criticizing are correct, and your nitpicking demonstrates that they're failing to make the most precise argument in support of their position. But you haven't demonstrated that they are wrong, and nothing you state supports your florid conclusion.

You complain about the "conversation [some] tort reform advocates are having with the public" because of this minor eliding of detail, but have you seen the conversation some reform opponents are having? For example, one opponent characterized the Texas reform as "patients' rights were slashed" and the reform movement as sinister interest group politics conspiring against a helpless anonymous majority (a strange way to characterize a referendum). The same advocate co-wrote an op-ed in the New York Times attacking caps and claiming that his research showed that President Bush's proposed malpractice caps wouldn't fix "skyrocketing insurance prices," but the final version of the published paper a few months later acknowledged "On economic grounds, one would expect liability caps to reduce both the number of large paid claims and the average payout per claim. In the long run, this should lead to lower insurance premiums." That reform opponent, to my knowledge, has not criticized other reform opponents who continue to release talking-points based on the overstated Times op-ed without correcting them to reflect the actual statements of the final paper. Do you find the oversimplification in your op-ed somehow less objectionable than the oversimplification from the doctors' group's talking points? Do you believe that these statements further the conversation debating reform, especially when these statements are made from the lofty position of a tenured law professor?

Best,

Ted

I don't see how you can claim that those statements "are false." You have given reasons why they might be false, but no Texas data to show that they "are false." Have you?

What is difficult is that a discussion can be entangled to the point where people are chasing footnotes and data that is only secondary to the discussion. This creates a bottleneck where nothing ever gets done.

Yes, definitive, objective data is needed to determine the significance of a change in policy or law but as noted, a small percentage difference is often "innocently" overblown.

What is needed is a rhetoric scale in arguements... possibly a panel of people sitting there with knobs like in a consumer study group... as the rhetoric goes up they turn the knob to the right.

While adjetives make for more interesting reading, they make for lousy public debate. My rule of thumb is that if it fits on a bumper sticker it is rhetoric... and unfortunately, we cannot lead a country with quips and fear.