A longstanding issue in the health care industry is whether physicians' mal
practice fears lead to defensive medicine. We use national birth certificat
e data from 1990 through 1992 to conduct a county fixed-effects analysis of
the impact of malpractice claims risk on cesarean-section rates and infant
health. Malpractice claims risk is measured by obstetricians' malpractice
premiums. The study provides evidence that physicians practice defensive me
dicine in obstetrics but that the impact of increased cesarean sections tha
t results from malpractice fears on total obstetric care costs is small. Th
e study also finds that physicians' defensive response varies with the soci
oeconomic status of the mother. (C) 1999 Elsevier Science B.V. All rights r
eserved.