According to a new study from RAND, the Affordable Care Act (ACA) may indirectly lower the cost of auto insurance. Though the ACA doesn’t cover auto liability, it may help vehicle owners with a drop in insurance rates, because those premiums have also been used to provide payments for injuries to auto accident victims who don’t have medical coverage. To date, more than 7 million individuals have signed up for health plan coverage.
RAND estimates Obamacare could drop the costs of auto insurance by as much as 5%. Each year, insurance companies pay out billions for medical care to cover claims related to car crashes. In 2007, auto insurers shelled out $35 billion for medical costs associated with accidents — accounting for about 2% of all health care costs that year.
On the flip side, although auto premiums may decrease, researchers warn that medical liability coverage could go up. More individuals using the health care system could result in an increase in the number of malpractice claims against doctors and hospitals.
In the case of car-insurance companies, the study points out that a percentage of uninsured people injured in a collision may receive treatment for existing medical conditions that are unrelated to the auto accident. It’s estimated that if those kinds of conditions were covered by health-insurance policies, it could trim up to 2% from the average costs faced by auto-insurance companies.
Why Obamacare may lower insurance rates:
• More people will have regular health insurance, leading to fewer claims against auto insurers for medical costs.
• Healthcare insurers negotiate lower costs than auto insurers for medical care.
• No-fault insurance tends to cost more than traditional coverage. As more people have health insurance, states with no-fault auto coverage may switch to traditional offerings.
The RAND study estimates that in states with highest Obamacare participation rates such as Colorado, Oregon, Florida, and Montana, by 2016, car insurance costs could decline by a range between 3% and 5%. As an example, if car insurance companies passed the savings to consumers in the form of lower rates, a driver with a $1,000 annual premium would save $30 to $50.
Do you think Obamacare will help lower car insurance premiums? Feel free to share your thoughts in the comments section below.