HB4936 – How HB 4936 in it’s current form will harm Michigan drivers
In a nutshell, all that House Bill 4936 does is cap the exposure of auto insurance companies here in Michigan which will decrease their overhead and increase their profits. And what do we, as insured citizens of Michigan, give up in order to increase the profits of auto insurance companies here in Michigan?
Well……. quite a bit.
- Increased Taxes – By capping medical coverage, there are a number of catastrophically injured auto accident victims who will quickly exceed the proposed medical coverage limits as proposed by Representative Peter Lund. For example, last year, the Michigan Catastrophic Claims Association, who is the entity currently responsible for paying the medical billing on catastrophic claims, paid over $600 million in catastrophic claims. The loss of this no-fault auto insurance funding will mean a massive cost shift from the auto insurance industry to Medicaid and Medicare which will effectively put the burden of paying for medical care and coverage on the tax payers rather than upon the auto insurance carriers, where it belongs.
- Loss of Jobs – Because medical care and treatment for severely injured auto accident victims will become underfunded under Representative Lund’s bill, thousands of medical care providers from transportation services to physical therapists, to in-home care givers, will lose their jobs as crash victims cannot afford to pay them out of their own pocket.
- Increased Insurance Premiums for Liability Coverage – Most Michigan drivers will be forced to buy more liability insurance coverage because all citizens will now have personal financial liability for any unfunded medical expenses sustained by the victim of an at fault accident.
- Inadequate Medical Care for Severe Injuries – Individuals who suffer catastrophic injuries and who did not buy enough medical coverage to cover the expenses will, in many cases, not receive the medical treatment or rehabilitation they require in order to retain the highest level of recovery.
- A Heightened Risk of Financial Ruin for Michigan Families – Michigan citizens who can’t afford the optional higher benefit coverage limits will be financially ruined if a catastrophic injury results in medical expenses in excess of the coverage selected. This is particularly true for motorcycle enthusiasts, who, under the proposal, will never have more than $250,000.00 in medical coverage for injuries suffered in auto accidents.
- Increased Health Insurance Costs – Because health insurance will have to pay medical expenses which are currently paid by auto no-fault insurance, a significant cost shift from the auto no-fault insurance industry to the healthcare insurance industry will occur. Accordingly, this will significantly increase healthcare insurance costs for Michigan families and small businesses who are providing healthcare insurance to employees. This is particularly troubling as most small businesses are experiencing double-digit increases in healthcare premiums for their employees on an annual basis.
- Increased Litigation – Catastrophic injured victims who incur medical expenses in excess of their selected PIP coverage will be forced to sue the at-fault drivers to recover the unpaid medical expenses which will unnecessarily increase litigation throughout all of Michigan’s court systems.
All in all, it looks like Rep. Lund’s bill will do nothing other than increase profits for his major campaign donors – the insurance industry.
The good thing is, as I stated in Part 2 of this series, the bill isn’t getting passed from the house anytime soon. Peter Kuhnmuench, executive director of the Insurance Institute of Michigan, is on record stating that insurance companies here in Michigan are still pursuing the reform and continue to meet with members of the House to find a version of the bill that would gather the necessary votes.
But even Mr. Kuhnmuench admits that most parties involved agree that if the bill doesn’t move by the end of the first quarter of 2012, it’s not going to happen, according to Gongwer News Service.
The funny thing is, the first quarter of the 2012 is right about the time that the Michigan Catastrophic Claims Association will announce it’s annual MCCA fee adjustment. This is a fee all auto insurance buyers pay that is part of your policy and the fee goes to the MCCA fund which is used to cover the expenses of catastrophic medical claims.
Proponents of HB 4936 claim that the MCCA fund is going to collapse under the current system, but, they refuse to provide internal data to back this up. They have steadfastly refused to produce any facts or figures to evidence the eventual collapse of the MCCA fund that they are predicting.
And who are those proponents? Basically the entire Board of Directors of the MCCA.
Will they announce a massive hike in the annual fee as a scare tactic to revive discussions regarding auto insurance reform in the House?
I wouldn’t put it past them.
Either way, the governor’s office is going to step into the discussion in the near future.
In the next article – we’ll discuss what Governor Snyder and you can do to make sure that our No-Fault auto insurance system continues to help and not hurt our citizens.