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CAS-Sponsored Research on ACA Impacts on Auto Liability Claims

01/05/2018 —

The RAND Corporation has recently published a CAS-sponsored report on the impacts on auto liability claims of the Affordable Care Act. This is part two of a project funded by the CAS that also explores the impacts on Workers’ Comp claims, published by RAND in 2016. The CAS Health Care Issues Committee, chaired at the time by Anne Petrides, FCAS, of the Medical Insurance Exchange of California first approached RAND in 2014 to explore how the CAS could partner with this premier research organization that had already undertaken research on ACA impacts.

The Effect of Health Insurance Coverage Expansions on Auto Liability Claims and Costs

How do the Affordable Care Act health insurance coverage expansions affect payment for medical care provided through liability insurance, such as auto insurance? Theoretically, expanding coverage might lead to a substitution of health insurance disbursements for automobile insurance disbursements. Alternatively, expanding health insurance coverage might increase utilization of medical care, increasing auto liability claims payments. The net effect of these two mechanisms can only be determined empirically. We evaluate the health insurance-auto insurance interaction by examining the 2010 ACA dependent coverage expansion. Prior to 2010, individuals 19 and older were excluded from health insurance coverage under their parental health insurance plan. In September 2010, as part of the ACA, individuals were allowed to continue health insurance coverage until age 26. We use this policy change and claims data from insurers representing approximately 60% of the automobile passenger market to evaluate the effects of expanding health insurance coverage on auto liability claim payments. Using a difference-in-difference research design, we find an approximate 10% reduction in the total BI claim count in the policy-affected 19–25 ages when compared to the control group of individuals 26–34. Conditional on filing a claim, we also find an approximate 9% reduction in the mean total auto insurance paid amount in the 19–25 ages compared to the 26–34 ages. We do not identify any effects of the policy on the PIP auto insurance line.

Research paper:

Health Insurance and Workers' Compensation Claiming: Evidence from the Affordable Care Act

Despite the fact that the U.S. workers' compensation (WC) systems provides tens of billions of dollars in medical care each year, relatively little is known about how changes in health insurance availability affect the incidence and nature of WC claims, and the theoretical relationship is ambiguous. In this paper, we exploit the Affordable Care Act (ACA) young adult dependent coverage expansion to measure the effect of health coverage expansions on WC claim frequency and severity. Using millions of hospital records drawn from four large states with distinct WC systems and a difference-in-differences research design that contrasts WC claims across narrow age bands, we find that a 10 percentage point reduction in uninsurance in the target population was associated with a 6%–9% drop in WC bills, with this decrease driven by harder-to-verify conditions, such as strains and sprains, as well as more expensive WC claims. These results suggest that the ACA coverage expansions may serve to broadly, albeit modestly, lower costs in the WC system.

Research paper:

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