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. We gratefully acknowledge financial support from the Casualty and Actuarial Society (CAS) and the RAND Institute for Civil Justice. We thank the Insurance Research Council for providing assistance in understanding the closed claims data, and David Auerbach, Michael DeMattei, Glen Leibowitz, Anne Petrides, and participants in the 2016 CAS Annual Meeting for providing helpful comments on this research. All statements and conclusions in the paper are the sole responsibility of the authors and not the aforementioned individuals or institutions.