Peculiar to say the least, studies have found Obamacare could reduce the cost of car insurance. RAND Corporation has done a study that shows the Affordable Care Act may be instrumental in lowering the cost of auto insurance, worker’s compensations and business liability.
Insurance companies often have to compensate people who don’t have coverage. Car owners and business owners pay liability insurance. Mostly, the money is paid to people who are not covered. As those people are also coming under Obamacare, car and business owners can heave a sigh of relief.
As it will happen in a roundabout way, David Auerbach, a key figure behind the study said, “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…”
The report by RAND sheds light on how the number of people with private health insurance and Medicaid has increased. The changes could make an impact on potential cost changes. The cost changes, as per estimation can be as high as 5%.
The potential changes have been described by Paul Heaton and Ian Brantley of RAND Corporation as, “Most are in the negative (cost-reducing) direction. In the case of the individual substation effect, liability insurers are, today, paying for some of the additional costs associated with treating the uninsured.” Obamacare differentiates one type of liability from the other. A car insurance owner will pay less for reimbursing the victim while a medical professional with medical malpractice coverage would have to pay significantly more.
The long term consequences of Affordable Care Act have been highlighted by Jayne Plunkett, whose company sponsored the study. Plunkett said, “Businesses and policymakers need to understand how and why their risk profiles might change as the Affordable Care Act is implemented…”
The size of Medicare payments is also to be changed. As car insurers rely on the rates paid by private health insurers and Medicare, reduction in the payment made by those companies will lower the amount that auto insurers pay as premium.
Interestingly, medical liability coverage could increase unlike car insurance premium rate. If more people come under the healthcare scheme, they could hold doctors and hospitals responsible by bringing charges against them. Thus, medical professionals may have to pay hefty sum as insurance premium.
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