Critics of proposed reforms to Michigan’s auto insurance policies, which would eliminate a mandate on carrying unlimited medical coverage, claim the new plan would require rate cuts for lower coverage and caps on charges to medical providers. The legislation, as presented, essentially asks for motor vehicle owners to have the option of choosing three different levels of personal injury insurance – unlimited coverage, $500,000 in coverage, or a $250,000 plan that would cover $225,000 in emergency treatment and $25,000 for any additional care required.
Insurers would be expected to cut the personal injury protection part of a customer’s bill by an average of 40 percent for at least five years if the lowest coverage option is selected. The insurance lobby has indicated its opposition to the bill as it’s been introduced because of these proposed rate controls, and the hospital lobby is on the same side of the fence.
“In my 30-year tenure in government affairs, I can’t recall a single piece of legislation that dictates the price of a product as this legislation does,” said Pete Kuhmench of the Insurance Alliance of Michigan. “This provision is a dramatic departure from free market principles and is not imposed on any other industries in this state that I’m aware of.”
Rep. Donna Lasinski, D-Scio Township, addressed the proposed rate rollbacks by using her own attire as an example. “I find the use of the words ‘rate rollback’ to be disingenuous because we’re not talking about me getting the same product – this jacket – for $6 instead of $10. I’m getting something completely different with holes and less warmth for not more than $6.” Senate Majority Leader Arlan Meekhof, a West Olive Republican, agreed, calling the rollbacks a form of “price fixing” he would not support.
“$500,000 on a catastrophic accident would probably last you two to three weeks, that’s how expensive it is in emergency care,” said Oakland County Executive L. Brooks Patterson, speaking from personal experience having been injured in a 2012 accident. “After that, who pays for your care? It goes over to Medicaid, a publicly funded insurance program you and I and every citizen in Michigan pays for.” He went on to say the proposal is, “the greatest robbery since the Great Train Robbery in 1855.”
The bipartisan plan has been backed by Democratic Detroit Mayor Mike Duggan and House Speaker Tom Leonard. “We are going to give drivers actual choice in the amount of insurance they buy,” Duggan said, “The only place in America where people don’t have choice on health care is car insurance” in the state of Michigan.
So far, the House Insurance Committee heard two days of substantial testimony without issuing a vote or indicating a clear timeframe for rolling out any changes. Chairwoman Lana Theis, R-Brighton, asked for any potential amendments to be submitted before coming to a final conclusion.
“This bill has made health providers frustrated, insurance companies frustrated (and) other stakeholders very uncomfortable,” Theis said, “but the group that is the most comfortable with this are the people of Michigan who stand to save billions.”