How hospital costs affect auto insurance

Auto injuries are costing insurance companies more.A number of factors can determine auto insurance cost. But what about auto injury claim costs?

On Thursday, the Insurance Research Council reported that a recent study showed that auto insurance companies are taking on more hospital costs because of low reimbursements from public health insurance programs. Low payments from programs such as Medicaid and Medicare have forced claim costs for auto injuries to rise.

Auto insurance companies now must examine and work out the details of hospital bills before payments are made. The IRC study found that cost shifting resulted in an overabundance of hospital charges totaling $1.2 billion during 2007, although the total cost is actually expected to be much more.

IRC senior vice president Elizabeth Sprinkel said that "the conventional wisdom is that hospitals aggressively seek to shift costs from public insurance programs to private payers such as auto insurance companies. With this study, we now have information on the magnitude of cost shifting and a better understanding of the need for supportive state laws and effective tools that will enable auto insurers to pay hospitals appropriately and help control auto injury claim costs."

The IRC has developed a statistical model to help consumers understand the relationship between auto injury claims and hospital cost shifting.ADNFCR-3298-ID-19744463-ADNFCR

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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