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Research Questions

  1. How might the Patient Protection and Affordable Care Act affect auto insurance, workers' compensation, and medical malpractice?
  2. Do these effects vary across states or across lines of insurance?
  3. Are other longer-term effects likely from the new law?

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. These changes will affect traditional health insurers, individuals, and government payers. In addition, a considerable amount of health care is paid for directly by or is indirectly paid for via legal settlements after the care occurs, by liability insurers. This report identifies potential mechanisms through which the ACA might affect claim costs for several major types of liability coverage, especially auto insurance, workers' compensation coverage, and medical malpractice. The authors discuss the conceptual basis for each mechanism, review existing scholarly evidence regarding its importance, and, where possible, develop rough estimates of the size and direction of expected impacts as of 2016. They examine how each mechanism might operate across different liability lines and discuss how variation across states in legal rules, demographics, and other factors might moderate each mechanism's operation. Overall, expected short-term effects of the ACA appear likely to be small relative to aggregate liability insurer payouts in the markets in question. However, under reasonable assumptions, some mechanisms can generate potential cost changes as high as 5 percent or more in particular states and insurance lines. The authors also discuss longer-run changes that could be fostered by the ACA that might exert more significant effects on insurance claim costs, including shifts in tort law, changes in physician supply, new pricing approaches under the accountable care organization model, and changes in population health.

Key Findings

The Affordable Care Act (ACA) Could Affect Other Lines of Insurance Through Five Main Mechanisms

  • Patients might less frequently use liability insurance to obtain treatment for unrelated health problems that health insurance would otherwise treat.
  • Liability payments could decrease in states that limit awards based on payments from collateral sources.
  • In states that do not limit the collateral source effect, liability claims could increase if health insurance pays at the time the care is provided.
  • Medicare rates, which form the basis for many liability payments, are reduced under the new reforms, and those reductions are likely to spill over into private rates.
  • Insured individuals have more contacts with physicians, make more visits, and receive more procedures, so they are more likely than others to file medical malpractice claims.

Overall Impacts Are Likely to Be Small in the Short Run

  • Other things being equal, the ACA is expected to reduce auto and workers' compensation insurer costs and increase medical professional liability insurer costs by a few percentage points as of 2016.
  • These impacts are likely to vary across states.

The ACA Could Have Other, Longer-Term Effects

  • Tort law might change because concerns underlying current rules will no longer be valid.
  • The ACA could foster new payment models and health care organizational structures.
  • Medicaid may increase subrogation against liability awards.
  • Wider availability of health insurance could improve preventive care and ultimately lead to greater population health.


  • To effectively understand the long-term health and trajectory of the U.S. liability insurance marketplace, stakeholders will need to continue to monitor ACA implementation and how it progresses.

This research was supported by Swiss Re and also in part by pooled contributions to the RAND Institute for Civil Justice, a program of RAND Justice, Infrastructure, and Environment.

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