LANSING — House Republicans are resurrecting a push to reform Michigan’s no-fault auto insurance system after failing to get enough support for sweeping changes proposed last year.
The new plan would scrap Michigan’s unlimited lifetime benefits for people catastrophically injured in car crashes and replace that benefit with a $10-million cap. It also would require that insurance companies guarantee 10% savings on auto insurance premiums for the first two years.
“Michigan has the best auto insurance in the nation, but also among the most expensive,” said Speaker of the House Jase Bolger, R-Marshall. “Families are struggling to pay their auto insurance bills. We want to maintain the best but make it more affordable.”
House Republicans tried to pass no-fault auto insurance reform last year but were thwarted after committee hearings attracted dozens of people opposed to the changes who had been critically injured in car accidents and benefited from the system. The opposition also had a strong voice in Oakland County Executive L. Brooks Patterson, who even before he was critically injured in an accident in August 2012 was against changes to the state’s insurance system.
The plan last year would have scrapped Michigan’s unlimited lifetime benefits and replaced it with a $1-million cap. Even at the reduced benefit level, Michigan’s system is the most generous in the nation. It is funded through an assessment all drivers pay to the Michigan Catastrophic Claims Administration, which manages the lifetime benefits for people injured in car crashes.
Ultimately, Democrats were united in their opposition to last year’s proposal and there weren’t enough Republican votes to get the plan through the House of Representatives.
But the GOP isn’t giving up. They think the new proposal has been changed enough to get a bipartisan majority.
“When you work through each of the items, we’ve addressed every single issue of opposition,” Bolger said in a conference call with reporters.
But opponents were quick to push back.
State Rep. Kate Segal, D-Battle Creek, called the new plan “an election-year giveaway to the insurance companies.”
The Coalition to Protect No-Fault said the 10% savings included in the bill will be a wash because there’s also a $25 assessment that will be included to cover Medicaid-associated claims.
And the Michigan Hospital Association said the new plan provides temporary savings that will last for only two years.
The Michigan Insurance Coalition, which generally supports reforming the system, was glad to see movement, but not overly enthusiastic.
“Despite our support for the positive ideas the speaker has put together, we continue to oppose government-mandated rollbacks in a free market system,” said Tom Shields, a spokesman for the coalition.
But Bolger said the $10-million cap will not only save money on the annual assessment charged by the MCCA, it also will cover the vast majority of people injured in accidents. The highest MCCA claim, he said, has been $12.7 million, and only a handful of people have gone beyond $10 million.
And the new plan will rein in costs by requiring that medical providers could only charge 125% of the rate charged for workers compensation claims. If insurers take longer than 30 days to pay the claim, the providers could charge whatever the current rate was, leading to quicker payment of claims.
The plan also would develop a low-cost insurance plan with a cap of $50,000 of coverage for low-income residents. But the plan does not address higher rates charged by insurance companies for people living in urban ZIP codes or with low credit scores.
The bills are expected to be introduced next week.