Tort reform has led to improvements in the Texas business climate that have generated hundreds of thousands of jobs. Specifically, TPG found that
• The total impact of tort reforms implemented since 1995
includes gains of $112.5 billion in spending each year as
well as almost 499,000 jobs in the state.
• The reforms with respect to asbestos/silica litigation,
which were enacted in 2005, are already contributing
$490.3 million in annual spending and 2,683 permanent
jobs.
• Reforms related to limiting non-economic damages in
medical malpractice litigation alone lead to increases of
$55.3 billion in spending per year and more than 223,000
jobs.
• Benefits are spread across the state, positively affecting
communities both large and small. Results are provided
for the state as well as every county, metropolitan statistical
“Tort reform has led to improvements in the Texas business climate that have generated hundreds of thousands of jobs.”
A Texas Turnaround: The Impact of Lawsuit Reform on Business Activity in the Lone Star State
4 perrymangroup.com
© 2008 by The Perryman Group
area, council of governments region, planning region, and
legislative district.
• The fiscal stimulus to the State from civil justice reforms
is about $2.558 billion per year.
• Other positive benefits include an increase in the number of
doctors, particularly in rural areas and other regions, which
have been facing severe shortages and the inclusion of
almost 430,000 Texans in health plans who would otherwise be uninsured.
....
Representative Changes in Malpractice Insurance
Rates for Physicians in the Houston Area
Rates for Physicians in Houston
2003 2007 2007 (with 20% renewal dividend)
Internal Medicine $18,507 $13,272 $10,403
Obstetrician $56,564 $41,575 $32,585
Neurosurgeon $103,558 $76,117 $59,659
.....
The Annual Direct Benefits to Texas Associated with
Recent (2003) Reforms Related to Non-Economic
Damages in Medical Malpractice Litigation)
Category Annual Direct Benefits
Cost Savings (administrative costs, insurance rate
reductions, non-productive expenditures, inefficiency, etc.)
$1,760.1 million
Reductions in Defensive Medicine $5,348.6 million
Enhanced Productivity from Health Improvements $7,699.9 million
Workforce Gains for Reduced Uninsured $180.5 million
Enhanced Health Care from Increases in Number of Physicians $3,823.3 million
Total gains stemming from the 2003 reforms related to non-economic damages in medical malpractice litigation include an additional $55.3
billion in annual spending, $26.1 billion in output, $16.6 billion in income, and nearly 223,700 jobs. State fiscal revenues also increase by almost $1.4 billion per annum.
........
The Perryman Group’s analysis of the incremental benefits of tort reform illustrates that the gains include nearly a half-million jobs in the state of Texas and about $31.6 billion in annual personal income. Annual output is also $51.2 billion higher, while total spending is up $112.5 billion each year as a result of reforms. A substantial portion of this stimulus stems from the recent efforts to limit non-economic damages associated with medical malpractice.
In addition to these quantifiable measures, there are a number of other positive outcomes such as growth in the number of doctors entering the state, a decrease in the volume of lawsuits with little real merit, and many others. Benefits accrue through multiple channels including the
investment climate, business activity, insurance rates, consumer wellbeing, productivity, jobs, output, income, inflation, economic development, and fiscal soundness. In fact, State budget resources (enhanced revenue and reduced spending requirements) are almost $2.6 billion higher each year than they would be in the absence of these reforms.
“The Perryman Group’s analysis of the incremental benefits of tort reform illustrates that the gains include nearly a half-million jobs in the state of Texas and about $31.6 billion in annual personal income.”
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