The ACA, more commonly known as “Obamacare” was in the spotlight of the media, as it became law on March 23, 2010. The goal of ACA was to make health insurance available and affordable for everyone, especially those that were not able to afford policies in the past.
During the first three months of effectiveness, 2.2 million Americans enrolled in coverage through the marketplace created by the law. Several years after becoming law, the Affordable Care Act has reduced the number of people without health insurance but has had some side effects that were not expected.
Both life insurance and casualty-property insurance have seen changes due to ACA. Depending on the situation, for an individual or a business, these changes can either be positive or negative.
Life insurance
Life insurance has seen several effects in a small business insurance perspective and from individual’s plans. Because of the financial implications that ACA brought, many businesses drastically changed the life insurance policies that they offer to their employees.
Some businesses have dropped their insurance benefits package (both health and life) due to ACA. Many businesses offer their employees offer packages of health insurance and life insurance for reasonable costs, but because of the rise in costs of ACA they cannot afford to offer them. According to a 2012 survey by Deloitte, a consulting firm, 9 percent of employers planned to end insurance benefits. Other surveys predict the number to be as high as 30 percent in the next few years.
Additionally, many people are decreasing the coverage on their health insurance plans due to ACA causing monthly premiums to rise. Higher deductibles and lower healthcare coverage are leaving some people with higher medical bills after their passing.
The probability of having sizable medical bills after death is encouraging many people to purchase life insurance, or increase their life insurance policy. Experts are expecting to see a further increase in the number of life insurance policies as health insurance premiums or deductibles could continue to climb.
Property-casualty insurance
Property-casualty insurance has also been impacted by ACA in the past year. While not directly targeted by ACA, property-casualty insurance policyholders could see significant changes from the healthcare law.
For example, car insurance could see changes in the next few years. With more people having health insurance, carriers will see less fraud and less future medical damages, which could translate into lower monthly premiums. Before the ACA was signed into law, many uninsured Americans would file an injury as an automobile insurance claim. In 2008, the Insurance Research Council studied first- party no-fault auto claims and found around 1 in 10 was fraudulent. These fraudulent claims cost car insurance carriers millions of dollars, forcing the companies to raise monthly premiums.
The wave that ACA created has spread throughout every facet of the insurance industry. The Insurance Research Council recently released a study showing the effects ACA could have on car insurance policies and other property-casualty insurance policies.
The IRC expects to see a change in “the behavior of medical providers as new cost containment efforts and initiatives by public and private health insurers begin to affect providers financially.” To summarize the IRC’s statements, medical providers will be losing revenue due to ACA, meaning they will be looking for other ways to recover the lost funds. One way they will do this is through cost shifting from health insurers to property-casualty insurance providers.
This same effect is being seen in several types of property-casualty insurance like home insurance and workers compensation.
After several years of ACA being effective, policyholders of health insurance, life insurance, and property-casualty insurance have seen changes, some for better and some for worse. As ACA becomes a seasoned law, consumers could see these changes continue, or they could see the market correct itself and have insurance policies return to a normal level.
