Medical Costs Shift to Auto Insurers, Leads to Higher Insurance Premiums

Man in wheelchairAccording to a new report, auto insurance companies are paying more of a car accident victim’s medical costs.

Public health insurance programs like Medicare and Medicaid are reimbursing less of the costs of medical care for car accident victims, reported the Insurance Research Council. That, in turn, is forcing hospitals to shift the cost of care to automobile insurers, leading to higher premiums.

Auto insurers must now heavily scrutinize hospital bills and raise rates to stay afloat, said the report. Lawmakers should work to provide tools that will help control the cost of injury claims, said IRC senior vice president Elizabeth Sprinkel.

About $1.2 billion in excess hospital charges were shifted to auto insurance companies in 2007, said the report. That could just be the tip of the iceberg and the full impact of cost shifting could be much greater, cautioned Sprinkel.

Cost shifting was minimized in Maryland by a 1970s law that allowed the state to regulate hospital reimbursement, said the report. Such regulation is unlikely to be replicated in other states, but it opens the door for discussion, said Sprinkel.

Reportedly, transferring hospital costs to private entities like auto insurers cost consumers more money over time.ADNFCR-3298-ID-19862085-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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