Abstract:
The tort system of which medical mal- practice is part has two functions-to com- pensate victims of injuries due to negligence of another party, and to deter such negli- gence. Although the system seems to per- form its compensation role poorly, there is little empirical evidence on the system's de- terrent effects. Critics assert that the system overdeters, and the cost of such allocative inefficiency is substantial. Whatever the de- terrent effect, there is plausibly less deter- rence with complete third-party insurance with little or no experience rating of premi- ums. Although experience rating is fre- quently used in many lines of insurance, there has been considerable resistance to ex- perience rating in the medical malpractice line...
