Obamacare: Rx For Lower Car Insurance?

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Obamacare: Rx For Lower Car Insurance?
  • date post

    20-Oct-2014
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    Automotive

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According to a new study from RAND, the Affordable Care Act (ACA) may indirectly lower the cost of auto insurance

Transcript of Obamacare: Rx For Lower Car Insurance?

Page 3: Obamacare: Rx For Lower Car 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.

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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.

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 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.

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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.

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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.

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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%.

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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.

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Do you think Obamacare will help lower car insurance premiums?