The cost of automobile insurance, workers’ compensation coverage and general business liability insurance could drop by as much as 5% thanks to the Affordable Care Act, according to a new study.
Though the health law doesn’t cover cars or workers compensation, new analysis by RAND Corporation indicates it may help car owners and businesses with workers’ compensation coverage because those premiums sometimes go toward treating people’s injuries, particularly those without medical coverage.
Liability insurance companies reimburse “tens of billions of dollars” each year for medical care related to auto accidents, workplace injuries and related claims, RAND researchers say. Auto insurers paid $35 billion for “medical costs associated with accidents in 2007,” RAND says, saying that totaled about 2% of all health care costs that year.
“Under reasonable assumptions, some effects can generate potential cost changes as high as 5% or more in certain states and for certain insurance lines,” Rand researchers Paul Heaton and Ian Brantley write in their study summary. “Most are in the negative (cost-reducing) direction. In the case of the individual substation effect, liability insurers are, today, paying for some of the additional costs associated with treating the uninsured.”
Jayne Plunkett, head of casualty reinsurance for Swiss Re, a reinsurance company that sponsored the study, says the study shines light on “the far-reaching impacts of the Affordable Care Act.”
“Businesses and policymakers need to understand how and why their risk profiles might change as the Affordable Care Act is implemented,” Plunkett says in a statement accompanying the RAND report.
While auto premiums and other forms of coverage could go down, researchers caution that medical liability coverage could go up. For example, RAND researchers said an increasing number of people using the health care system may trigger an increase in the number of malpractice claims against doctors and hospitals.
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