Implementation of the Patient Protection and Affordable Care Act (ACA) will greatly expand private coverage and Medicaid while making major changes to payment rates and the health care delivery system in a number of areas. Although considerable analysis has been devoted to understanding the impacts of reform on health care providers, insurers, and patients, less attention has been given to other payers that fund health care services, such as property and casualty insurers and workers’ compensation (WC) programs. In 2008, for example, WC programs paid out $29 billion in medical claims, while property and casualty insurers made an additional $30...

In this chapter, we review the main provisions of the ACA that might be expected to interact with liability insurance and offer a brief primer on the various lines of insurance that we consider in this report. Readers already familiar with the basics of the ACA and liability insurance may wish to skip to Chapter Three of the report.

The ACA, as modified by the Health Care and Education Reconciliation Act (Pub. L. 111-152), was signed into law on March 23, 2010. The act contained a large number of provisions affecting the U.S. health care system, some beginning immediately and...

In this chapter, we discuss the potential effects of the ACA, drawing from empirical data and analysis where possible to attempt to gauge the magnitude of effects across different lines of insurance and across different states. We identify a series of mechanisms by which the ACA could plausibly affect liability claims and payouts. For each mechanism, or effect, we describe what the effect is and provide examples of how the effect might be manifest in particular insurance markets. We then discuss the data and parameters that would be required to project the size of the effect and, where possible, compile...

Taken individually, the effects we analyzed in Chapter Three do not, for the most part, generate large predicted changes in insurers’ liability costs. Here, we combine information across all five effects discussed previously to obtain aggregate predictions regarding the ACA’s impact on insurers’ costs as of 2016. We again caution that these estimates are subject to considerable uncertainty, and these quantitative estimates fail to account for some effects that may be present but for which insufficient data exist to make a reasoned judgment regarding impacts.

We find that the effects we identified are relatively small in magnitude in terms of...

Our discussion thus far has focused primarily on the ACA’s short-to medium-run impacts on liability markets and considered effects for which data exist that might provide a plausible means of approximating the size of the effect. Available data do not suggest that the ACA is likely to dramatically affect costs across most liability lines and states, at least in the near term. However, it seems at least possible that the ACA might engender more-substantial changes to the health care system that could, in turn, exert a more profound influence on liability markets. In this chapter, we discuss a few examples...

Will the ACA affect liability insurers’ costs in the near to medium term? Our answer is yes. In particular, this report suggests that the ACA provisions that expand coverage and change Medicare payment rates have the potential to affect liability insurance costs through a variety of plausible mechanisms. Chief among these are direct changes in reimbursement rates for providers, changes in the availability of payments from collateral sources, changes in the volume of care—with corresponding implications for MPL—and shifts in the likelihood that consumers will use liability coverages to cover unrelated medical conditions.

The bulk of the effects...