April 9, 2014:
The increased coverage requirements mandated under the Affordable Care Act are shifting the payment landscape for other types of insurance, including auto insurance, and worker’s compensation.
Automobile, worker’s compensation and general business liability insurance costs could potentially fall under the law, according to nonprofit research organization RAND. On the other hand, medical malpractice coverage costs could tick higher.
The report says there could be as much as a 5% change of costs in those three insurance policies in certain states, but adds there is “considerable uncertainty” around these estimates.
Researchers examined how the ACA might operate across different liability lines and how those lines might vary across states given existing laws, population demographics and other factors. RAND reports that liability insurance companies reimburse tens of billions of dollars annually for medical care related to auto accidents, workplace injuries and more.
David Auerbach, RAND policy researcher, says the impacts are small but noteworthy, and have the potential to evolve overtime.
“We don’t know how this will play out and if the ACA will lead to lower costs overall,” Auerbach says. “Insurers could see their costs going down, but there are things that could change within specific markets.”
More Americans are projected to be gain health insurance under the ACA, with 7.1 million people having selected plans on both state and federal exchanges according to President Obama’s latest enrollment announcement. This means the costs of providing auto insurance, workers compensation and homeowners insurance could fall for providers.
It’s important to note, as RAND does, that cost changes may ultimately hit consumers.
The study also cautions that with more people being covered under the ACA, the number of medical malpractice claims made against doctors and providers could increase, making these costs higher.
“There’s more care being provided, so naturally there’s more that can go wrong,” Auerbach says.
The ACA mandated that every individual in the country have insurance by March 31, or they will face a fine of $95 a year or 1% of their annual income for failing to comply.