The Untold Story of the Affordable Care Act’s Effect on Auto Insurance Rates
A new study revealed that customers may see lower auto insurance rates as a result of the Affordable Care Act (ACA). Those who now have health insurance and have also filed an auto insurance claim requiring medical care, may be in for some savings as health insurance companies are better able to negotiate with providers for lower rates.
The Affordable Care Act and Auto Insurance Claims
The report, “How Will the Patient Protection and Affordable Care Act Affect Liability Insurance Costs?,” by nonprofit research firm the RAND Corporation, discussed how auto insurance claims have changed under the new health care law, and the anticipated cost benefits auto insurers and their customers may see as a result of the health care shift.
Cost-control features of health insurance saves money on medical expenses and treatment linked to auto insurance claims, notes the report.
“The Affordable Care Act is unlikely to dramatically affect liability costs, but it may influence small and moderate changes in costs over the next several years,” said David Auerbach, lead author of the study, in a statement. “For example, auto insurers may spend less for treating injuries, while it may cost a bit more to provide physicians with medical malpractice coverage.”
Auerbach expressed that the savings auto insurers stand to receive from more health-insured customers is minimal overall, accounting for about a 2 percent increase in saved heath care expenses.
However, for injury victims without health insurance or minimal health coverage, auto insurers must pay doctors directly, unable to leverage the same cost savings that health insurance companies enjoy.
ACA, Car Insurance Rates and Malpractice
This very challenge arises for those who purchased so-called “catastrophic” health insurance. This type of coverage is available to a limited number of people, but is a high-deductible plan that, at times, requires more than a $6,000 deductible, according to The Chicago Sun-Times.
A concern among those in the auto and health industries is the greater likelihood of unscrupulous health providers inflating costs and over-utilizing treatment that either auto insurers or patients must pay for out-of-pocket.
The RAND investigation stated, “An increase in the number of people using the health care system may trigger a corresponding increase in the number of medical malpractice claims made against physicians and other health care providers. Such a shift could drive malpractice costs modestly higher.”
Auto insurance companies have limited ability to control excessive medical treatment. With health insurance providers directing care, reducing costs associated with malpractice will be difficult to prevent.
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