'Defensive medicine' is a potentially serious social problem: if fear of liability drives health care providers to administer treatments that do not have worthwhile medical benefits, then the current liability system may generate inefficiencies much larger than the costs of compensating...

We address long-standing problems in measuring medical inflation by estimating two types of price indices. The first, a Service Price Index, prices specific medical services, as does the current CPI. The second, a Cost of Living Index, measures a quality-adjusted cost of treating a health...