awards or strengthen obstacles to filing lawsuits. Specific examples include: • A cap on non-pecuniary losses, such as pain and suffering or disfigurement. Critics argue that these damages are subjective and result in a “lottery,” a suggestion explored in Section D of this paper. (Some states have capped pecuniary losses, such as lost wages or medical bills, as well.) • Eliminating awards for damages covered by collateral sources, such as health or disability insurance and sick leave. While the parties paying these benefits can subrogate—seek reimbursement for the payments they made to the victim—it is argued that, in practice, these payors sometimes fail to assert their right, resulting in the plaintiff receiving a “double recovery.” • Abolition of joint and several liability, the doctrine that allows a successful plaintiff to obtain his or her entire judgment from any joint tortfeasor (doctor, hospital, etc.). Although payors can seek contribution from other tortfeasors, providers argue that they should be held liable only in proportion to their fault. • Obstacles to filing lawsuits, such as a shortened statute of limitations or caps on attorney fees that discourage lawyers from taking on small or difficult cases. There is agreement that a cap on nonpecuniary damages reduces payouts to plaintiffs.4 Researchers estimate that any resulting reductions in premiums are smaller than the reductions in damage payouts in scale.5 Research findings on other tort reform elements are inconclusive.6 The economic theory behind the tort system holds that the parties in the best position to avoid causing an injury must bear all the costs of the injury in order to be deterred from unsafe practices. Abolishing joint liability gives hospitals less incentive to screen doctors to whom it grants admitting privileges. Shifting costs to collateral source payors might be efficient in some cases—as where a large company selects its employees’ health care providers—but to date no legislation addressing collateral sources has made this distinction. Caps on non-pecuniary damages raise equity concerns. The highest such damages tend to be awarded to the most severely injured,7 and the nonpecuniary element of awards is proportionally higher for female and retired plaintiffs.8 Finally, no one suggests that these traditional “tort reforms” have the ability to reduce medical injuries or would improve compensation of victims. B. Subsidy programs Some states have attempted to alleviate the immediate financial pressures facing doctors through the use of subsidy programs. These programs spread the cost of liability insurance more widely, usually 4 by using tax revenue or credits to offset part of premiums or damages. • Pennsylvania is using cigarette tax revenues to pay a portion of doctors’ malpractice premiums.9 Maryland has passed a similar law.10 • Doctors practicing in specialties considered a “high risk” for lawsuits, such as those who perform obstetrical services, are charged higher premiums than other doctors. In 1988, North Carolina enacted the Rural Obstetrical Care Incentive (ROCI) Program to provide state funds of up to $6,500 per year to pay the additional premium amount for doctors who deliver babies in rural areas.11 More recently, Oregon created a similar program.12 • States can sponsor risk-pooling arrangements, such as Kansas’ Health Care Provider Insurance Availability Plan. This mechanism, which ensures that every doctor can obtain liability coverage, is subsidized by surcharges on medical liability policies purchased by doctors in the private insurance market.13 • Another proposal to deal with the higher premiums charged to practitioners in high-risk specialties is “rate compression,” which would narrow the difference in premiums across practice areas by having doctors with a low risk of lawsuits cross-subsidize their higher-risk peers.14 Advocates of this approach argue that it recognizes that primary care physicians “refer up” high-risk cases to specialists. • New Jersey assessed a $3 per employee tax on employers and a $50 tax on licensed professionals to create a fund that pays awards of non-pecuniary damages in excess of $300,000.15 • Another type of program, exemplified by one implemented by the District of Columbia, indemnifies doctors who work in clinics serving low-income patients.16 Subsidy programs have not drawn much attention either from interest groups or academics, but there has been considerable legislative activity in this area of late. Rural health care experts have called the North Carolina ROCI program an “innovative” response to rising malpractice insurance rates and reduced access to obstetrical care in rural areas, but to date there has been no empirical research on the other programs’ implementation. In theory, lowering providers’ costs should keep marginally profitable providers in business. At the same time, the economic theory of tort law suggests that there may be a trade-off in safety to the extent that insulating providers from the cost of the injuries they cause reduces their incentive to practice cautiously. C. Reducing transaction costs of litigation A large portion of doctors’ liability insurance premiums is spent defending claims (see Figure 3), many of which are eventually dropped by plaintiffs’ attorneys.17 The cost of litigating a claim that goes to trial is higher than the cost of one that is settled.18 Following are examples of measures