No-fault auto insurance reform gets growing opposition – Detroit Free Press
LANSING — As the Michigan House of Representatives prepares to vote on a bill, perhaps later this week, that would make major changes to Michigan’s no-fault auto insurance system, opposition to the proposal is ramping up.
The Michigan Health and Hospital Association started airing a TV ad over the weekend, which cost nearly $800,000, and features a woman severely injured in a car crash who has benefited from Michigan’s unique system of lifetime benefits for accident victims.
The week-long ad is geared toward letting Michiganders know that a major change is being debated and could get a final vote in the Legislature this week, after only one hearing in the state Senate and three days of hearings last week in the House.
“We believe this is a critical issue for Michigan drivers and patients, and it’s moving too quickly for this significant of an issue,” said Ruthanne Sudderth, spokeswoman for the association. “We want to make sure that people know what’s at stake.”
And Oakland County Executive L. Brooks Patterson, a car crash survivor himself, made a public appearance Monday at Beaumont Hospital in Royal Oak rejecting arguments from the insurance industry that the reform is needed.
“Senate Bill 248 drastically cuts reimbursements that directly impact health care for the survivors of catastrophic accidents in exchange for a two-year $100 per-vehicle premium reduction,” said Patterson, who was joined by doctors and car crash victims. “We’re here to make sure all legislators and all Michigan residents know exactly what’s in this bill.”
The insurance industry is also spreading cash around on the issue, generously contributing to lawmakers, including members of the House and Senate committees which passed the legislation in the last two weeks.
The political action committee for Detroit-based Blue Cross/Blue Shield of Michigan, the biggest insurer in the state, for example, contributed $140,000 to lawmakers in the first quarter of the year, according to campaign finance reports filed with the Secretary of State.
In order to get Michigan’s highest-in-the-nation insurance rates under control, “cost controls have to be put in place,” said Tom Shields, spokesman for the Michigan Insurance Coalition.
The changes to the no-fault auto insurance system passed by the House Insurance committee last week includes:
■ Currently, insurance companies pay for the first $535,000 of care for severely injured accident victims. The Michigan Catastrophic Claims Association — fueled by an annual fee on car owners — takes over and pays costs for the rest of the lifetime care for those critically injured people. Nearly 15,000 people are receiving benefits under the MCCA.
The bill provides for phasing out the old MCCA, which is run by the insurance industry, and setting up a new catastrophic fund run by gubernatorial appointees. The old MCCA would continue providing care for current accident victims for the rest of their lives.
But a set fee schedule would be put in place for all accident victims — 150% of rates charged for Medicare — that health care providers could charge for services to critically injured people.
Hospitals say the change will bankrupt them, cutting $1.2 billion in insurance reimbursements annually. Sudderth said hospitals proposed a 20% cut in reimbursement rates, which would cut $500 million from hospitals annually, but that offer was rejected by the Insurance Committee.
■ Rates for home health care providers would be capped at $15 per hour for family members, unless they were trained health care professionals. The amount could go up if more specialized care is needed. Families of car crash victims said in hearings last week that many people have to quit their jobs to provide 24/7 care to family members.
■ Unlike the Senate plan, the House version mandates that insurance companies reduce auto insurance rates by $100 per vehicle for two years.
That provision angered Democratic lawmakers, especially in Detroit, where drivers can pay $5,000 or more per year for auto insurance.
Barry Smith, 65, of Detroit, said he pays $5,000 a year to insure his 2003 Mercury Marquis.
While he’s concerned about his high rates, he also feels the legislation is putting profits before people.
“The insurance companies are putting the care of people below their finances,” he said. “It helps to keep the human factor at the forefront.”
A $150,000 appropriation was added to the bill, which makes the legislation immune from any potential citizen-led drive to repeal the law.
The bills — SB 248-249 — are on the House calendar, but haven’t been scheduled for a final vote yet.