The Effects of the Affordable Care Act on Property and Casualty Insurance
There has been significant attention paid to the Affordable Care Act (ACA), or Obamacare, for Health Insurance. A recent study from the Insurance Research Council (IRC) highlights implications for the Property and Casualty Industry.
The study reports that the property-casualty insurance industry is likely to become the target of significant additional cost-shifting by hospitals, physicians, and other medical providers responding to the cost-containment provisions of the Patient Protection and Affordable Care Act (ACA). By dramatically altering the healthcare industry, the ACA influences all buyers of medical services and products in the United States.
Although the property-casualty insurance industry is not directly included or targeted by the act, it is not operating in a vacuum. As a purchaser of healthcare services and as a participant in healthcare markets, the property-casualty industry finds itself in a changed environment, where the medical providers with whom they engage and the claimants they serve are themselves confronted by major changes related to the ACA. Increased cost-shifting could have potentially significant and long-lasting consequences for property-casualty insurance.
Cost-containment efforts by other public and private health insurance systems are likely to result in higher billings and higher utilization when property-casualty insurance claims are involved in the months and years ahead, as medical providers seek to offset lost revenue from health insurance sources. Strengthening the tools available to property-casualty insurers to address higher charges and higher utilization of medical services should be considered.