In personal injury law, a medical malpractice cap is a mandatory limit in medical malpractice cases on how much money a jury can allow a plaintiff (or in
cases of wrongful death, his or her family). For example, if a doctor negligently removes a part of your digestive tract during surgery (it's happened before), so that you'll have to incur over a million dollars in medical treatment for the rest of your life - not to mention constant discomfort and pain - if the law states that you can only recover $500,000, then any jury award in excess of that amount gets thrown out. Medical malpractice caps exist in many states, and were recently proposed at the federal level during the budget battles between Democrats and Republicans.
In October of 2011, the D.C.-based Cato Institute published a study, available here http://www.cato.org/pub_display.php?pub_id=13780 , showing that medical malpractice caps in the end do more harm than good for patients. (The Cato Institute is pro-free market, and has greater contact with Republicans than Democrats in D.C.) One reason is that caps prevent juries from making case-by-case determinations of how great an award they should allow to plaintiffs. Obviously, a lot of people harmed by medical negligence don't suffer $500,000 worth of harm - but some suffer much more than that, and medical malpractice caps don't take this into account.
Caps also harm future patients. Awards - particularly high awards - in medical malpractice cases are deter bad doctors, forcing them to either improve their practices, or leave the business and stop hurting people. The Cato Institute study found that bad doctors hit with high judgment awards in court may pay medical malpractice insurance premiums up to 500% higher than their peers.
High premiums are exactly what we want for bad doctors - to make sure they shape up, or leave. The civil justice system, with juries free to make their own decisions in each case about the size of judgment awards, has a valuable role to play in ensuring a safe medical system. If bad doctors have to pay the price, that's a good thing.