Part 2: How will the loss of current No-Fault benefits harm Michigan Driver's?
Many years ago when the No-Fault Insurance Act was implemented, the citizens of Michigan were guaranteed lifetime medical benefits for injuries arising out of an auto accident. They were also promised lower premiums. Although we have not seen the lower premiums that were guaranteed years ago by the insurance industry, we have enjoyed the peace of mind that comes with knowing that if you or a loved one was catastrophically injured in an auto accident, that you will be cared for and your medical bills will be covered.
What Representative Peter Lund’s bill proposes to do is to effectively gut the no-fault system as we know it in the following fashion:
- Lifetime full medical coverage would be eliminated.
- Many citizens who currently are covered in the case of an auto accident, would be given no choice as to the amount of medical coverage that they would have.
- Victims who are injured through no fault of their own and who would exhaust the capped medical coverage, would have little choice but to go broke paying the medical expenses from their own pocket and then file bankruptcy. They would have to look to their own health insurance coverage which would not nearly be as broad as no-fault medical coverage which would leave many expenses unpaid. Worst case scenario? – they would have to seek medical coverage through Medicaid and Medicare which effectively puts the financial burden of those auto accident medical expenses on the backs of Michigan’s tax payers.
- Families would be forced to institutionalize their injured family member because vital home care, which is currently covered by no-fault, would be significantly reduced and restricted.
- Government imposed price controls on medical care providers which would reduce their ability to get paid for treatments provided and cause many healthcare practitioners to refuse to treat victims of auto accidents as it would be no longer economically feasible for them to engage in that type of treatment.
- Increase premiums for many citizens as they will be forced to look to other insurance programs to supplement their now-gutted auto insurance policy.
- Immunity for insurance companies and agents who sell incorrect or inadequate coverage to policy holders.
- No guarantee of any insurance rate relief if the reforms pass.
But these aren't the reasons that the bill as currently written has stalled out in the House. It didn't stall because it is bad for Michigan citizens. Most folks in the know say that the current bill was anywhere from 15-25 votes away from getting passed out of the house. With these numbers, it's clear that since it reported from committee to the house in mid-October it wouldn't pass in it's current form.
The first question is "why?"
Well, it's been any number of things depending on who you ask in the house. Some of those on the far right side of the aisle don't like government getting in between two differing business groups – the insurance industry and the Coalition for the Protection of Auto No-Fault which is compromised of medical groups such as the Michigan State Medical Society and the Michigan Osteopathic Association as well as consumer groups such as the Brain Injury Association of Michigan and the Michigan Association for Justice. Some legislators are opposed to what the bill would do for those facing catastrophic injuries and the "bean counters didn't think the beans added up right" according to Gongwer News Service.
What beans are they referring to? The beans contained within the Michigan Catastrophic Claims Fund [MCCA]. This is where part of all our premium dollars go to fund the insurance coverage on catastrophic medical claims. Proponents of the insurance reform claim that the No-Fault system is going broke. When asked to prove it, the insurance industry and the MCCA refused to open their books to confirm what the insurance reformers were claiming.
This lack of transparency was unsettling to some legislatures and is another reason why the bill has been slow to move beyond the house.
Now that we've discussed how the potential loss of current auto No-Fault benefits will harm Michigan citizens and why HB 4936 stalled out in the Michigan House, we will look at the specific problems that would be created if the bill somehow passes in it's current form and what Governor Snyder and our legislature plan to do to revive talks of auto insurance reform.