DO DOCTORS PRACTICE DEFENSIVE MEDICINE

''Defensive medicine'' is a potentially serious social problem: if fea r of liability drives health care providers to administer treatments t hat do not have worthwhile medical benefits, then the current liabilit y system may generate inefficiencies much larger than the costs of com pensating malpractice claimants. To obtain direct empirical evidence o n this question, we analyze the effects of malpractice liability refor ms using data on all elderly Medicare beneficiaries treated fbr seriou s heart disease in 1984, 1987, and 1990. We find that malpractice refo rms that directly reduce provider liability pressure lead to reduction s of 5 to 9 percent in medical expenditures without substantial effect s on mortality or medical complications. We conclude that liability re forms can reduce defensive medical practices.