Michigan Auto Insurance Bills Passed by Senate

By | April 20, 2015

A divided state Senate approved revisions to Michigan’s auto insurance law that backers said would curtail costs in the only state to require unlimited medical benefits for those severely injured in crashes and that opponents warned wouldn’t guarantee rate relief.

The Republican-led chamber voted 21-17 mostly along party lines to move the legislation to the House after five hours of closed-door meetings and debate on the floor. Democrats unsuccessfully sought 17 amendments, including some that would have required auto insurers to cut premiums that are among the nation’s highest.

While the bills don’t mandate reduced rates, insurers say they would drop in the free market to coincide with unspecified corresponding cost savings.

“The best approach to bringing down insurance rates in Michigan is to take costs out of the system,” said the legislation’s sponsor, Senate Insurance Committee Chairman Joe Hune.

The Republican from Livingston County’s Hamburg Township said unlimited lifetime benefits would stay intact, unlike in bills introduced last session that would have capped them at $1 million or $10 million for newly injured motorists.

Countered Sen. Coleman Young II, a Detroit Democrat: “It is unconscionable for this Legislature to be helping the insurers without helping the people first.”

He said competition among profitable insurers hasn’t driven premiums downward and “won’t under this bill.”

The main legislation would:

  • Curtail auto insurance medical payments to the average of what commercial health insurers pay if negotiations between auto insurers and health providers fail. Car insurers complain that they pay more than health insurers do to make up for lower Medicaid and Medicare payments to hospitals, resulting in higher premiums for motorists.
  • Create a more transparent entity to replace the Michigan Catastrophic Claims Association, which is funded with a $186 annual per-vehicle fee assessed on drivers and covers severely injured motorists whose medical bills and rehabilitation costs exceed $530,000.
  • Limit insurance reimbursement for in-home nursing care for people recovering from their injuries by establishing maximum hourly rates and hours. Patients could go above the caps if authorized by a medical review.
  • Establish an insurance authority to investigate fraud in the no-fault system.

Michigan mandates that drivers have unlimited personal injury protection covering medical expenses and lost wages.

The 37-year-old nonprofit unincorporated association whose members are auto and motorcycle insurers paid out $1 billion in 2014 to care for roughly 15,000 injured motorists — mostly for brain and spinal cord injuries, multiple fractures, and back and neck injuries.

“The cost is just astronomically high, and unfortunately we are pricing people out of the market in our urban centers,” said Sen. Virgil Smith of Detroit, who called the Senate vote a “huge first step.”

He was the lone Democrat to support the measures, along with 20 Republicans. Seven Republicans joined 10 Democrats in opposing the bills.

GOP leaders, who came under criticism for rushing the bills through committee and the Senate in about 27 hours without adequate time for review, said the issue has been debated for a decade. Previous legislation stalled under resistance from the medical community, patients and plaintiffs’ attorneys.

“We’ve gone a long ways here to ensure that the viability of the system will continue,” said Senate Majority Leader Arlan Meekhof, a West Olive Republican. “We’ve saved I think the most important part, the lifetime unlimited benefits for those folks who are injured.”

Critics, however, had questions about creating a new driver-funded entity to replace the MCCA, which would dissolve once existing liabilities are paid. Steve Sinas with the Coalition Protecting Auto No-Fault said it’s unclear how $18 billion in MCCA reserves would be transferred to the new association.

Another opponent, Democratic Sen. Rebekah Warren of Ann Arbor, became emotional while telling the story of her older sister, who was severely hurt in 1983 when a semi ran a red light and struck her car. She was in a coma for more than four months, needed five years to “put her life back together” and was still undergoing crash-related surgeries nearly 20 years later, Warren said.

“The cracks that start today undermine the system forever,” she said of the legislation, cautioning that health providers will decide against serving crash victims if insurance payments decrease.

The auto reform measures are Senate Bills 248-249.

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Latest Comments

  • June 16, 2015 at 10:05 pm
    knight4444 says:
    My last rant, ANYONE foolish enough to believe the politicians especially the REPUBLICAN politicians in michigan give a DAMN about us po folks, then you're delusional! the ins... read more
  • June 16, 2015 at 3:44 pm
    knight4444 says:
    Well @John, prices are going down a little for me, my AAA agent gave he a quote for a 6 month policy for $1981.95 that's for full coverage and a $2.000 deductible. The main re... read more
  • June 16, 2015 at 2:56 pm
    John says:
    Yup. That sounds about right. Well you know Knight, you have to pay for those unlimited life time benefits for someone who sued their insurance company for a broken arm and so... read more

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