Understanding the Future Effects of the ACA on Liability Insurance
There has been lots of speculation about how passing the Patient Protection and Affordable Care Act, more commonly referred to as the ACA, will change insurance, especially the cost of specific kinds of insurance. Here’s what you need to know about the effects of the ACA on liability insurance, both the current effects and what experts predict in the future.
How Does the ACA Affect Insurance?
The ACA is the biggest overhaul of United States Healthcare policy to date. It was created with the intention of lowering the uninsured rates in the United States through a series of mandates, subsidies, and insurance exchanges. The Act includes changes to the list of conditions that must be covered by an insurer and standards of insurance.
Lots of drastic changes were predicted, but the RAND Corporation has found that the overall effects of the ACA are likely to be relatively small in the short-term. If you are currently pursuing a liability claim, consult with your lawyer, or a liability law expert like those with Cummings Andrews Mackay LLP, about how the ACA may affect your case.
The ACA and Liability Insurance
Short-term effects of the ACA include: a reduction in auto and workers’ compensation insurer costs and an increase in medical professional insurer costs. It’s predicted that these effects will be visible by 2016, though they will vary based on state law.
In the long-term, there are five main effects liability insurance is likely experience due to the implementation of the ACA.
Lower Liability Payouts
In the past, many uninsured patients have used liability insurance to cover the costs of health problems that are unrelated to their new injury. Many of these patients will receive health insurance coverage under the ACA, allowing them to seek treatment for pre-existing conditions through traditional health coverage. This will lower the relative amount of many liability payouts.
Costs Shift Toward Health Insurers
Under the collateral source rule, which disallows compensation from another source (such as health insurance) to be used as evidence when determining the amount of the payment owed by his or her insurer, many liability insurers have been forced to grant larger settlements, even when a plaintiff has had previous compensation.
In some states, however, this rule is limited and previous compensation can be used to offset the responsibility of the liability insurer. In these states, as insurance coverage increases, this may cause costs to shift away from liability insurers and toward health insurers.
Increased Liability Claims
Care providers are more willing to provide care to patients who have health insurance. Because of this, higher rates of coverage may result in increased liability claims in situations where the liability claim is filed after patient has already received medical care covered by their health insurance.
Reduction in Liability Payouts
Experts predict that the ACA’s reduction of Medicare rate costs will also decrease the costs of private providers. Because most liability insurers’ rates for medical care are based on the cost of either Medicare or private rates, overall liability payouts may decrease due to the reduced cost of medical care.
Higher Volume of Medical Malpractice Claims
Because medical malpractice suits require that a plaintiff have interaction with a medical care provider, rising rates of health insurance coverage will likely increase the volume of medical malpractice lawsuits.
(Information from the RAND Corporation)
If you are dealing with a liability claim, whether you’ve been involved with an automotive accident or are pursuing a workers’ compensation settlement, consult with your legal representative to determine how the ACA may affect your claim.
Category: Liability Insurance
