Economist's Notebook: Correlation and Causation, MD Version

Yesterday, I caught a kittle bit of NPR's Talk of the Nation. Monday's show featured a doctor, Rahul Parkih, who who doesn't think tort reform will help keep down health care costs. Interesting, thought I and so I lingered around the radio. Then came a statement that got me ranting at the radio. Here is a paraphrase of the statement made by a doctor:

-The Congressional Budget Office has reported that over the last ten years the rate of malpractice suits has not increased but health care costs have. So it is not the threat of lawsuits that is promoting excessive or defensive medicine.

What is wrong with this statement?

The error of logic is that we don't know if lawsuits are a stable threat or if they have remained stable precisely because of excesses in the name of defensive medicine to avoid a lawsuit. I am inclined to draw the opposite conclusion: that with so many doctors claiming that they have become much more defensive and yet lawsuit rates are the same, so it is likely to be a bigger threat today then ten years ago.

Here is the piece he wrote for Slate that got him invited to share his views on Talk of the Nation which expands his argument but begins with this same assertion. Now he may well be absolutely right about tort reform, but this is his first and biggest piece of evidence and to me it says absolutely nothing. This is also true of a study he cites that found most malpractice suits are not frivolous, but this is also consistent with an increase in defensive medicine.

Whether defensive medicine is actually driving up health care costs is an open question and he does not believe they are. In which case the tort reformers argument would lose a lot of its punch.

For the record, I am personally skeptical of tort reform because I am a hopeless believer in markets, but I want to see real data not this kind of sloppy thinking (something he accuses others of filling up the back pages of newspapers with).