Over the fifty years, Americans all over the United States have struggled with a difficult debate about the “so called” flaws in our Health Care System.  Some say it’s a good system and some feel it’s just plain bad. Regardless of what side of the issue you come down on in this squabble, in 2010 a national health care law, commonly called Obama Care, was passed and signed into law by President Barack Obama. As far as this agent is concerned, I’m sadly confident the new health care law will adversely affect auto insurance rates and cause financial distress for every auto insurance buyer across our great nation.

The bottom line is this; what ever laws which affect health care and health care reform will directly and negatively impact auto insurance premiums for every American who buys auto insurance. The problem will come down to cost shifting between traditional health care providers, the government and auto insurance carriers. In today’s insurance system, there is a very fair equity based agreement between all insurance companies about claims. It’s referred to as Claims Subrogation. Here’s how it works. If insurance company “A” makes payment on a claim for which insurance company “B” is responsible, company “B” will reimbursed company “A” for the full amount defrayed by company “A.”

When Obama Care starts to take hold in 2014; reimbursement rates for both State and Federal Programs such as Medicare and Medicaid will be responsible for reimbursing auto insurers for the medical bills the carrier pays on behalf of its auto insurance customers.  Reimbursement rates from both Medicare and Medicaid are far too low to cover an insurance provider’s expenses. Auto Insurance Carriers and other medical reimbursers of medical services will then need to charge higher rates to make up for the reimbursement shortfall.

Currently, the medical part of an Auto Insurance Policy is between 15% and 18% of an Auto Insurance Policy’s state minimum premium. In order to make up for this lost revenue, an auto insurance carrier may need to raise its customer’s rates.  On an average, the typical auto insurance customer could see an increase of 15%. This would translate to a $150.00 to $180.00 annual increase for most drivers. I’m sorry to say, this is not change I can believe in. In fact, once americans are forced to pay these drastic monthly increases in the medical insurance premiums; Obama Care will defeated and President Obama will be out of a job.

Because the negative effects on the entire health care system, such as outlined above, was not studied by law makers prior to the passing of Obama Care, it’s hard to tell how adversely last year’s health care reform law will affect auto insurance rates. What is certain, cost shifting will increase as the rolls of Medicaid and Medicare recipients are expanded and the other changes come into effect. It’s entirely possible that 15% to 18% higher auto insurance rates could be a low estimate. Since No-Fault Auto Insurance has been outlawed in most states, the auto insurance system has been self-sustaining. Unfortunately this will not be the case once health care reform reaches your car insurance monthly payment.

Mike Dortch, licensed Property/Casualty/Health Insurance Agent

7/8/11  UPDATE:  Since I first posted this article in February;  Obama Care has been proven to be flawed.  At least 2 dozen of the United States’s largest Corporations have requested waivers to not take part in the program. Personally; I have felt the effects of this new law.  On May 1., InsureDirect.com’s health insurance bill increased by ?12,000.00 for no reason. Instead of accepting the increase, I took an option of increasing our prescription deductible by $3000.00 and my Hospital deductible by $9,000.00.