Liability insurance companies reimburse tens of billions of dollars each year for medical care related to auto accidents, medical malpractice, workplace injuries, and more. How might the new health care policies affect their costs?
The liability insurance industry plays a critical role in the U.S. health care system. In 2008, for example, property and casualty insurers paid out $30 billion in injury payments, while workers’ compensation programs paid $29 billion in medical claims. The Patient Protection and Affordable Care Act (ACA) will increase health insurance coverage and may promote significant changes in the organization, delivery, and financing of health care. It stands to reason that these changes could affect health-related liability claims and payouts. Ultimately, any cost changes experienced by insurance companies could be passed on to consumers through changes in premiums and coverage options.
RAND researchers conducted one of the first systematic empirical explorations of the ACA’s potential impacts on costs for liability and related lines of insurance, including auto, workers’ compensation, medical malpractice, and general liability. The team examined how the ACA might operate across different liability lines and how effects might vary across states given existing laws, population demographics, and other factors.
The ACA is unlikely to dramatically affect liability costs in the long term.
Although there is considerable uncertainty surrounding these estimates, as of now, the best available evidence suggests that impacts arising through these five channels will be modest. The table below summarizes the estimated range of effects across states by market as of 2016, when the ACA is expected to be in full force. Most expected impacts are relatively small in percentage terms because they are relevant for only a fraction of the U.S. population (those gaining insurance coverage) or because the underlying behavioral changes from the ACA are relatively small (e.g., shifts in provider fees). The full research report has more-detailed information for each line and state.
Read more, and see the report details here.