An excellentarticle in this weeks JAMA about how much the fear of malpractice drives doctor's to do unnecessary tests to avoid litigation. The study, by Studdert et al., examined doctors practicing in high risk specialties (emergency medicine, surgery, ob/gyn, neurosurg, orthopedics and radiology).
A total of 824 physicians (65%) completed the survey. Nearly all (93%) reported practicing defensive medicine. "Assurance behavior" such as ordering tests, performing diagnostic procedures, and referring patients for consultation, was very common (92%)
I knew things were bad but wouldn't have guessed this bad. One reason people are going off to India and Mexico for surgeries is they are so much cheaper there, but one reason they are so cheap there is the doctor's don't have to pay malpractice premiums, or if they do they don't approach the ones here.
What would happen to health care costs if we gave people the option of choosing medical care that would severely limit malpractice awards? Costs would likely go down substantially and patients might be much more assertive in assuring they are getting good care by evaluating the quality of doctors before using them.
That said, I a lot of unnecessary testing etc. is more the result of the culture of medicine which tends to emphasize caution and certainty, than fear of litigation itself. It may be that doctors order extra tests to make themselves feel more certain and use litigation as a good excuse.