Michigan is the currently only state that requires vehicle owners to buy unlimited medical insurance to cover injuries from automobile accidents, but residents may soon have other options. A new bill backed by Detroit Mayor Mike Duggan and House speaker Tom Leonard would eliminate this requirement. Instead, motorists would have the option to carry unlimited coverage or choose to carry coverage at $250,000 or $500,000 instead. These amounts are still much higher than in most states with only New Jersey requiring a minimum of $250,000.
Those who choose the option for $250,000 of coverage would be guaranteed 40 percent in personal injury protection fees, which is equivalent to a 20 percent reduction in the overall cost of purchasing a comprehensive policy and 50 percent lower than a basic policy.
Senior citizens age 62 and older who are on Medicare or other retiree benefits can choose one of the options or decide against purchasing personal injury protection entirely for a nearly 35 percent cost savings. Another cost-saving provision in the bill requires auto insurers to reimburse set fees to health providers for treating auto injuries.
Detroit has the highest car insurance rates in the United States, and Michigan’s annual average auto insurance premium is $2,394, the highest in the nation. “Forty-nine other states are doing just fine without this unlimited system,” said Mayor Duggan. “We have a chance to do something really important. We’re going to push really hard to make it affordable. It is a civil rights issue because we need people to be able to get to work. And with so many of the jobs not being near where people live, this is life and death to us.”
Duggan added that the Michigan Catastrophic Claims Association fund has almost enough money to care for the people currently in the system and the new people going into the lifetime benefits system will pay far lower rates for the medical services they receive. “When we put fee schedule in, it will make MCCA more solvent,” Duggan said. “The MCCA costs will go down and not up.”
“What was proposed today cuts costs on the backs of some of Michigan’s most vulnerable people,” John Cornack, president of the Coalition Protecting No-Fault, said. “People who are paralyzed, people with brain injuries and children whose parents purchase these bare-minimum policies will all suffer under this proposal because they won’t get the care they need.”
Despite receiving an overwhelming amount of support, the new legislation has been opposed by a coalition of healthcare providers, plaintiffs’ attorneys and patient advocates. Critics say those with paralysis and brain injuries would not “get the care they need”. Michigan Health & Hospital Association CEO Brian Peters called the legislation a “nonstarter,” stating it’s unable to guarantee rate reductions for all drivers.
Proponents countered that treatment would not stop for more extensive injuries but would be covered by their health insurer after medical bills have exceeded the amount allowed at $250,000 or $500,000.
“We have a very broad coalition and that’s what we need to get this done,” Speaker of the House, Tom Leonard, said of the proposed options.
The GOP bill sponsor, House Insurance Committee Chairwoman Lana Theis, will begin hearings next week.