No fault auto insurance reform steaming through Capitol – Detroit Free Press
LANSING – For the third time in two years, lawmakers are trying to overhaul Michigan’s no fault auto insurance system in an effort to bring down costly rates for consumers.
But efforts have always gotten sidetracked by the specter of catastrophically injured people who fear they’ll lose out on care if the latest version of reform passes.
As the House considers a bill rushed through the Senate last week, hundreds of people — including many in wheelchairs — came to Lansing this week to speak out on the bill. The opposition has benefited from high-profile people speaking out against the reform, like Oakland County Executive L. Brooks Patterson, who was critically injured in a car accident in 2012.
“It seems that every 20 years or so, the auto insurance industry aligns with misguided political leadership to reignite the battle field,” Patterson said in a statement. “I fail to see any positive benefit from the destruction of the best auto insurance program that serves the recovery needs of the catastrophically injured.”
But this time is a little different. Michigan’s unique position of having a system that pays for lifetime benefits and all the costs associated with catastrophic injuries will stay the same, with a new fund created and picking up costs for care over $535,000. That’s a key component for many lawmakers considering the reform.
“My top priority is that we keep the best benefits in the country and lower rates for consumers,” said state Rep. Tom Leonard, R-DeWitt Township, chairman of the House Insurance Committee.
But the new plan caps the price that medical providers can charge for certain services and limits the amount of money that caregivers can charge to provide home health care help for the most critically injured people. Those provisions have medical providers crying foul, but are enough to get the support of the auto insurance industry.
“We’re getting to the point where many of our consumers can’t afford our product,” said Peter Kuhnmuench, executive director of the Insurance Institute of Michigan. “We have to try to be more efficient with the dollars we provide for no fault.”
Medical providers believe that a one-size-fits-all approach to reimbursing for health care providers would be devastating for the industry that cares for brain-injured accident victims, who make up nearly half the 36,685 claims to the Michigan Catastrophic Claims Association.
The MCCA is governed by the insurance industry and collects an annual assessment on auto insurance policies and pays out for care for the injured. This year’s assessment is $186, but it is expected to go down to $150 later this year. The bill would phase out the MCCA and replace it with a commission that would be comprised of seven people appointed by the governor. Unlike the MCCA, the new commission would be subject to Freedom of Information Act and Open Meetings laws.
“If these fee schedules are put in place, we would be committing malpractice,” said Joseph Richert of Special Tree Rehabilitation Services of Romulus. “There is no way we could meet the needs of the people with brain and spinal cord injuries.”
For Charlie Parkhill, a Bloomfield Hills resident who was confined to a wheelchair when he was injured in a diving accident in 1998 and now owns a physical therapy company in Livonia, the changes in the fee schedule would be extremely harmful. He ticked off the cost for special bikes and treadmills used to help brain injured clients and the cost is $45,000 for the bike and $29,000 for the treadmill.
“It does cost more to treat people with these injuries. To us, the fee schedule may not be fair for people we’re trying to treat,” he said. “I understand insurance companies need to control costs. But you should consider multiple fee schedules.”
Rates for home health care providers would be capped at $15-per-hour for family members and could go up if more specialized care is needed.
One problem with the bills, especially for Detroit lawmakers, is that there is no guaranteed rate relief for customers. Kuhnmuench said no recent figures are available, but past studies have shown that rates could go down by as much as 16.9%
But in a city with some of the highest auto insurance rates in the nation — with an average of more than $5,000 a year, according to Carinsurance.com — the Detroit caucus in the House is united in its opposition to the legislation.
In the past, Democrats have tried unsuccessfully to get bills passed that would prohibit insurance companies from using credit scores and zip codes to determine insurance rates.
“We won’t get truly affordable insurance unless we ban these insurance company practices,” said Rep. Alberta Tinsley-Talabi, D-Detroit.
State Sen. Virgil Smith, D-Detroit, introduced a bill Wednesday that would allow insurance companies to offer low-cost alternatives to certain Detroit residents. But those policies would not get the lifetime benefits offered through the state’s no-fault system.
Leonard said that he still is in discussions with all the interested parties in the legislation and that nothing is off the table, including a possible mandate for rate reductions.
“I want to make sure that anything we do is actuarially sound,” he said. “Everything is still on the table. I don’t think the bill will leave committee the same way it came in.”
The House Insurance Committee is meeting again Thursday morning and could vote on the bill then.
Contact Kathleen Gray: 517-372-8661, firstname.lastname@example.org or on Twitter @michpoligal.