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The Affordable Care Act Also Lowers Your Car Insurance Rate


by: Emily Cadik

Fri Apr 25, 2014 at 00:00 PM CDT


The Affordable Care Act isn't just making health care more affordable. It's actually bringing your car insurance rates down too - not to mention workers' compensation and business liability insurance costs.

According to a study by the RAND Corporation, costs in some of these insurance lines could be reduced by 5 percent or more as a byproduct of having so many people insured because of the ACA.  

Read why after the jump.

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There are a few reasons that other non-health insurance costs will be lower because of the ACA. Though of course none of these types of insurance are directly covered under the ACA, the injuries that they cover often are. And patients might use liability insurance less frequently to get treatment for health problems if they have health insurance. Liability claims are also expected to drop in states that limit the awards based on payments from other sources (like health insurance). On top of that, patients who go to the doctor more often are less likely to file medical malpractice claims. There are several other factors at work here too, but the bottom line is that the ACA has some pretty significant spillover effects in this area.

According to RAND researchers, liability insurance companies currently reimburse tens of billions of dollars each year for medical care related to car accidents, workplace injuries and other accidents. For instance, car insurance companies paid $35 billion for medical costs associated with these accidents in 2007, which amounted to close to 2% of all health care costs that year. Now, it's more likely that health insurance will pick up part of this tab.

Unfortunately the decrease in insurance costs may be limited in Texas because of the state's refusal to expand Medicaid. According to the RAND report, "There are many state-level variables that will influence any impacts on liability costs created by the Affordable Care Act. This includes items such as whether states require medical costs to be deducted from liability awards or whether states choose to implement the Affordable Care Act's optional Medicaid expansion." And by not expanding Medicaid, there are 1 million fewer insured Texans.

But the results show just another reason that health insurance is so important beyond the obvious health benefits.

The findings also come on the heels of learning that the health insurance premiums under the ACA are $5 billion lower than expected, which means the federal government will now have to spend $164 billion less in federal subsidies over the next decade.

So health insurance is cheaper, car insurance is cheaper and the law itself is even cheaper than expected. Everyone wins.  



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