Lansing— A new Citizens Research Council of Michigan report says the state’s no-fault auto coverage leads to medical costs and insurance premiums that are higher than in other states.
While taking no position on proposed changes, the report gives additional ammunition to Gov. Rick Snyder and Republican lawmakers wanting to revamp Michigan’s 40-year-old vehicle insurance law.
“Michigan auto insurance provides very generous and comprehensive health benefits,” Research Council research associate Nicole Bradshaw said regarding the report. “However, these benefits are costly.”
Bradshaw said there may be ways to reduce costs “while still preserving most or all of the current benefits."
This state is one of a dozen that allow or require motorists to buy no-fault insurance, under which each drivers’ insurer pays for his or her injuries and auto damage no matter which of them caused the crash.
Michigan is unique in mandating unlimited medical care coverage for accident victims. Its Catastrophic Claims Association adds a $175 annual assessment to each vehicle insurance policy and reimburses auto insurers for crash injury treatment claims exceeding $530,000.
But The Citizens Research Council says a main reason Michigan auto insurers pay higher medical costs is a dictate that they pay customary rates charged by hospitals and doctors. Health insurers such as Blue Cross Blue Shield of Michigan and Medicare, in contrast, pay considerably less than the amounts hospitals and doctors bill, according to the report.
Crash injury treatment claims in Michigan cost auto insurers 57 percent more than claims for similar injuries in other states, according to the report.
Those claims, which make up 30 percent of insurers’ costs to provide vehicle coverage, result in premiums that, on average, are 17 percent higher than in other states, CRC says.
Legislation containing proposed reforms has stalled in the Michigan House of Representatives, but House Speaker Jase Bolger, R-Marshal, wants to get it moving again.
It would limit coverage for such things as attendant care for the injured and allow for a rate table to set costs for common injury treatments.
“Speaker Bolger wants to address no-fault reforms because he wants to save no-fault while protecting Michigan's drivers from exorbitant prices,” said spokesman Ari Adler. “How we do that is still up for discussion, but we need to take action and solve this problem."
Adler added that the CRC report “does provide a number of interesting options on how to lower those costs and we'll be looking at them closely.”
Among the options, each with its pluses and minuses:
These and other options have been debated among lawmakers in recent years. The medical community has resisted efforts to set fee schedules.
“We are waiting for a compromise to come out of the legislative leadership,” said Tom Shields, spokesman for the industry-related Michigan Insurance Coalition.
He said the coalition hopes there still will be action this fall.