Answers to the Hard Questions on Proposition 12


  • HB 4 sets caps on noneconomic damages at $750,000. But to avoid lengthy litigation, the constitutional amendment, Proposition 12, is imperative. With the likelihood of years in the court system, HB 4 alone does not provide the immediate impetus for lowered medical liability rates nor the hope for less steep increases.


  • Without relief from soaring medical liability rates, Texans are losing access to health care. Doctors are relocating to less litigious areas of the state or out of state completely, retiring early, or limiting the types of care they provide. The number of medical school applicants is declining, and medical students are selecting their specialties with an eye to the cost of providing care.


  • Caps on noneconomic damages are the surest, proven method for reining in medical liability rates. California has a 27-year track record with caps on noneconomic damages that has held up to the test of time, resulting in not only overall lower medical liability rates, but also in slower, smaller increases in the rates.


  • Caps on noneconomic damages have no effect on actual losses. These true economic losses include: lost wages, medical care, and replacement of contributions to the home and family such as cooking and cleaning.


  • Lost wages are calculated on actual earnings at the time of the incident, plus expected future increases. Income for lost wages is tax free. 

-Lost wages are calculated for a time period of a typically healthy individual's life expectancy, plus benefits such as health and life insurance, sick leave, and retirement income.

-For a stay-at-home parent taking care of children, his or her potential wages, based on her education or training, are included in lost wages. The cost of replacing this person's contribution to the family care also is included.

-For an infant or child, lost wages most often are calculated on the life expectancy of a healthy individual at the minimum wage with likely increases, plus benefits such as health and life insurance, sick leave, and retirement income. An alternative, more complicated calculation takes into consideration the parents' ages, education, income, and what they do for a living.

-For an older child with demonstrated academic and/or athletic achievement, lost wages may be calculated at a higher expected income.

-Elderly individuals who no longer are in the work force do not have lost wages. 

  • Current and future medical care is a true economic loss. 

-For a profoundly disabled person, whether infant or adult, the cost of future medical care is calculated through a "life care plan" that includes every conceivable medical cost.

-For a less affected individual, the cost of future medical care is for expenses related to the actual injury or disability.

Last Updated On

June 22, 2016

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