Obamacare has already changed our nation’s health care system in many ways. For this reason, it is both celebrated and rejected, depending on the perspective. A recent report by RAND Corporation set out to discover what long-term and short-term effects the Affordable Care Act might have on the costs of several types of insurance. The researchers found that expansion of health insurance under the Affordable Care Act had the potential of changing costs of several major types of liability insurances, including automobile and malpractice. However, the report also assured that these increases and decreases in insurance costs would most likely be small.
According to the report, these changes could be as much as five percent of costs in some states; however, estimations are contingent on many factors and are subject to change. Based on a recent press release, this report is one of the first studies to investigate how the Affordable Care Act could influence costs for liability and related lines of insurance. The study set to have a closer look at how the Affordable Care Act would work in a variety of liability lines, and how the effects could differ from state to state due to factors such as preexisting laws and population figures. “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, explained in the press release.
Results showed that costs of providing car insurance, workers' compensation, and homeowners' insurance is likely to decrease. This is because much of the costs paid out by liability insurance companies may be covered under the Affordable Care Act. The lowered costs for insurance companies will trickle down to the consumers, who may experience lower premiums and more coverage options. At the same time, however, the increased number of people using the health care system may cause an increase in the number of medical malpractice claims. If this occurs, it will cause malpractice costs to slightly increase.
The study believes that these figures will differ greatly across state lines. Factors such as whether a state needs medical costs to be deducted from liability awards or if a state wants to use the Affordable Care Act’s optional Medicaid expansion are likely to have significant effects on the report’s estimations. “This study highlights 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,” Jayne Plunkett, head of casualty reinsurance for Swiss Re, the study’s sponsor, said in the press release.
The study’s focus was on the short-term effects of health reform on the cost of liability insurance, but researchers also explored some of the long-term effects that the Affordable Care Act could have. This included possible further reductions in the cost of liability insurance, modifications of tort law, changes in pricing of medical services, alterations in the number of practicing physicians, and greater efforts by Medicaid to regain some injury payments.