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GAO discussed the implications of medical malpractice for health policy and medical care practices. GAO noted that: (1) health care expenditures accounted for about 12 percent of the gross national product, and 40 percent of those expenditures were publicly financed; (2) malpractice insurance costs increased from $1.7 billion in 1983 to $5.9 billion in 1988 for physicians and from $800 million in 1983 to $1.3 billion in 1985 for hospitals; (3) physician malpractice insurance premiums varied according to their specialty and geographic location; (4) state licensing boards took few disciplinary actions against physicians; (5) the legislatively established National Practitioner Data Bank, expected to be operational by September 1990, will include information about licensing boards' and hospitals' disciplinary actions against physicians and medical malpractice claims paid by insurance companies against licensed practitioners; and (6) the tort system for compensating victims of medical negligence was inefficient, inequitable, costly, and time-consuming, and did not deter negligent medical practice. GAO believes that, while the high cost of malpractice insurance and the threat of litigation have contributed to significant changes in medical care delivery, it is unclear whether those changes: (1) improved the quality of care; (2) decreased the incidence of negligent medical practice; (3) unnecessarily added to health care delivery costs; or (4) effectively addressed the fair compensation of victims of medical negligence.