Affordable Care Act may lower liability insurance costs

The effects of expanded private coverage and Medicaid under the Affordable Care Act go beyond health insurers to other liability insurance companies, namely, auto insurers, a new report from the Rand Corporation finds.

Below are three ways the ACA could affect other lines of insurance:

1. Decreased liability costs in certain states

Each year, liability insurance companies reimburse billions of dollars related to car accidents, among other types of claims. But, as more people enroll in health coverage, payers may shift some of these costs to consumers' health insurance.

"Auto insurers may spend less for treating injuries, while it may cost a bit more to provide physicians with medical malpractice coverage," David Auerbach, the study's lead author and a policy researcher at Rand, said yesterday in a statement.

Because Medicaid expansion depends on individual states, the study notes many state-level variables will influence impacts on liability costs. If healthcare costs decline, costs of liability insurance may fall as well.

2. Lower Medicare rates

Many car insurance companies base their payments on rates paid by Medicare and private health insurers, according to the study. So, any reductions in what Medicare pays for a service may affect what a car insurance company would pay for a similar claim. This could mean a 1 percent cut for auto insurers, the report estimates. Reduced Medicare hospital rates under the ACA also could affect the medical portion of workers' compensation.

3. Lower premiums

In 2007, medical costs from auto accidents forced car insurers to pay out $35 billion, about 2 percent of all healthcare costs that year, notes the research. So, as uninsured people continue to enroll for coverage, insurers may not have to put aside as much money to pay for their care. As a result, insurers may pass on the savings to patients as lower premiums, according to CBS News.

And since people use car insurance to get treatment for medical treatment unrelated to an accident, the ACA will allow them to use their health insurance instead.

For more:
- here's the Rand study
- check out the announcement