Open enrollment for health insurance offered by the Affordable Care Act (“ACA”) recently wrapped up. Initial reports indicate 7.1 million people have signed up for health insurance through the exchanges since the ACA enrollment started. Many personal injury lawyers, myself included, are curious to see what effect the ACA will have on our clients. Back when open enrollment first started, I made a number of practical predictions about how the ACA will affect our clients and practice. Last week, the nonprofit, nonpartisan RAND Corporation issued a new report predicting the effect the ACA will have on different types of liability insurance, such as automobile insurance. While some of the information in the report is insightful, much of the analysis has limited application to the DC metropolitan area.
Before I start summarizing the report, it is important to remember that healthcare costs are like a long balloon that a magician uses to make animal shapes. The balloon contains a specific amount of air. Squeezing one segment can make it smaller, but it simultaneously makes another segment larger. For healthcare costs, the segments are (a) consumers, (b) medical care providers, (c) health insurance companies, (d) liability insurance companies that pay for injuries, and (e) the government. Giving one segment a benefit will impose a cost on at least one other segment. For example, reducing the price that consumers pay for a doctor’s visit causes the doctor’s revenues to decline. Broadly speaking, the RAND report discusses how the ACA will inflate, or deflate, the liability insurance segment of the healthcare cost balloon. Deflating the liability insurance segment does not mean that the costs disappear, just that they are borne by another balloon segment.