Defensive Medicine and Obstetric Practices: Evidence from the Military Health System

Abstract

We estimate the extent of defensive medicine by physicians during labor and delivery, drawing on a novel and significant source of variation in liability pressure. In particular, we embrace the no-liability counterfactual made possible by the structure of liability rules in the Military Heath System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care, while protections are provided to dependents treated at military facilities and to all patients—active-duty or not—who receive care from civilian facilities. Drawing on this variation and addressing endogeneity in the choice of treatment location by estimating mother fixed effects specifications and by exploiting exogenous shocks to care location choices stemming from base-hospital closures, we find suggestive evidence that liability immunity increases cesarean utilization and treatment intensity during childbirth, with no measurable negative effect on patient outcomes.