ACA Could Affect Auto, Other Liability Insurance Costs

The Affordable Care Act’s (ACA) reach may not be strictly limited to healthcare insurance, as a new study finds the healthcare law could alter costs for other liability insurance for the better.

According to the new report from the RAND Corporation, automobile, workers’ compensation, and general business liability insurance costs could fall under the ACA, and costs for medical malpractice coverage may increase.

“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,” David Auerbach, the study's lead author and a policy researcher at RAND, said 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.”

The study was sponsored by reinsurance company Swiss Re. The other authors of the study were Paul Heaton and Ian Brantley of RAND.

According to RAND, auto insurers paid $35 billion for medical costs associated with accidents in 2007, but some of those costs could now be covered by the ACA, which would mean lower auto insurance. The same affect could hit workers compensation and homeowners insurance.

Unfortunately, as many physicians have feared, the increase in people using the healthcare system could also increase the number of medical malpractice claims, driving those costs higher.

In the long-run, liability insurance costs could fall further if healthcare costs are successfully driven down over time. However, the massive changes from the ACA aren’t just limited to insurance. RAND estimates that the law could result in modifications of tort law, shifts in medical services pricing, changes in the number of practicing physicians, and increased efforts by Medicaid to recover a portion of injury payments.

“This study highlights the far-reaching impacts of the Affordable Care Act,” Jayne Plunkett, head of casualty reinsurance for Swiss Re, said in a statement. “Businesses and policymakers need to understand how and why their risk profiles might change as the Affordable Care Act is implemented.”