Obamacare could cut the cost of car insurance

Whether you like or hate Obamacare, there's no argument it's having big and unexpected impacts on many aspects of American life. One of the most unexpected: It may lower how much you pay for car insurance.

According to a new study from RAND, the Affordable Care Act may indirectly lower the cost of both auto insurance and worker's compensation. That's because those types of policies have also had to provide payments for injuries to people without medical coverage.

Every year U.S. insurance companies have to pay out billions of dollars for medical care because of injuries in the workplace, car crashes and similar claims. According to the report, in 2007 medical costs from auto accidents forced insurers to pay out $35 billion, about 2 percent of all health care costs that year.

As more of the previously uninsured get coverage through Obamacare, insurers won't have to put aside as much money to pay for their care -- and that could mean lower premiums. Also, some patients now use automobile liability insurance to get treatment for medical problems unrelated to an accident. With the ACA, they'll be able to use their regular medical insurance to pay for that.

"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," David Auerbach, the study's lead author and a policy researcher at RAND, said in a statement. "For example, auto insurers may spend less for treating injuries, while it may cost a bit more to provide physicians with medical malpractice coverage."

As Auerbach notes, this isn't going to be a huge change. The study predicts Obamacare cuts average costs incurred by auto insurance companies by about 2 percent. But that's not the only impact it could have.

Obamacare will also reduce the size of Medicare payments. Most car insurers base their payments on rates paid by Medicare and private health insurers, so cuts in what those companies pay is likely to reduce the amount auto insurers pay. The report estimates this could mean an additional 1 percent cut for car insurers. Depending on what state you live in, this could mean you'll pay up to 5 percent less for car insurance.

But there's also a possible downside. As the report notes: "An increase in the number of people using the health care system may trigger a corresponding increase in the number of medical malpractice claims made against physicians and other health care providers. Such a shift could drive malpractice costs modestly higher."

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    Constantine von Hoffman is a freelance writer and writing coach. His work has appeared in outlets such as Harvard Business Review, NPR, Sierra magazine, Brandweek, CIO, The Boston Herald, TheStreet.com, CSO, and Boston Magazine.

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