Obamacare, the law that could save you 2% or more on car insurance.
It isn't exactly the main pitch behind the health-insurance law, but a study released Wednesday by the Rand Corporation finds that as more people gain health insurance, the costs of other types of insurance could go down. In particular, car insurance and other liability-insurance companies that typically spend tens of billions of dollars each year on health-care claims related to car accidents, workplace injuries and other scenarios could see their health costs decline and could pass those savings on to consumers in the form of lower premiums.
In the case of car-insurance companies, the study points out that some uninsured people, upon suffering through a car accident, may then seek treatment for conditions they have that are unrelated to the car accident. If those types of conditions were covered by health-insurance companies, it could shave up to 2% off of the average costs incurred by auto-insurance companies, the study found. "It's extraneous stuff you might get the auto insurer to pay for," says David Auerbach, the lead author of the report and a health policy researcher with Rand Corporation. "It's hard to tell what was actually caused by the accident." Health-care law, employers boost insured
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Some insurance companies may also benefit from a change that is hurting hospitals financially: smaller Medicare payments. Since most car-insurance companies base their payments on the rates paid by Medicare and private health insurers, any reductions in what those insurance companies are willing to pay for a service is likely to lead to a reduction in what a car-insurance company would pay for a similar claim, says Auerbach, which estimates fee changes could save car insurers up to 1% in claim costs.
And insurers in certain states might benefit from a rule that restricts how much car insurers are required to pay out if a person has health insurance. In most states, any payments a person receives from their health insurance are ignored when determining how much a car insurance company should pay out for that accident. But in the states that don't allow those double payments, car insurance companies may see smaller health-care bills related to a crash as more of those costs are shifted to health insurers. This could be the biggest source of savings for car insurers, reducing their claim costs by up to 3.8%, the study found.
Of course, insurance companies could decide to keep these savings for themselves in the form of higher profits - if they actually materialize. If they do pass them on to customers, a 2% discount on a car insurance bill may not leave a huge mark on the average driver's bank account. And some of the people who might end up spending less on their car-insurance premiums could find themselves paying a larger health-insurance premium or paying for health insurance for the first time. Those added costs might offset any savings they would incur on the car insurance end.
And like many other aspects of the ACA, the final impact is going to vary by state. Those states that expanded Medicaid eligibility or that saw a strong increase in the number of people signing up for private insurance plans may see the biggest savings on other types of insurance, says Auerbach. The American Insurance Association, a trade group for property-casualty insurers, says insurers are "paying close attention as to what effect the ACA may have on auto insurance" and that insurers will consider the "totality of these cost factors when setting rates in the competitive auto insurance market."
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