Lansing — Efforts to revamp Michigan’s no-fault auto insurance system resumed Wednesday with day-long debate over a research group’s report that said the state’s “generous” medical benefits push up the cost of coverage.
On Wednesday morning, a coalition of medical and consumers groups criticized the report from the Citizens Research Council of Michigan as flawed. Researchers who performed the study are scheduled to answer lawmakers’ questions about their findings later in the day.
The research group looked only at the costs of auto injury treatment when two-thirds of what motorists pay for auto insurance is based on collision damage repairs, leaders of the Coalition Protecting Auto No-Fault argued.
Coalition President John Cornack described the state’s current system of unlimited medical care for crash injury care as “wonderfully unique. We’re paying for the care that every other state would want.”
Accident victims whose treatment costs exceed $530,000 get ongoing care funded by the industry-run Michigan Catastrophic Claims Association. It adds an annual assessment, currently $175, to each auto insurance premium to cover those costs.
No other state has this system, which Gov. Rick Snyder has declared to be unsustainable. The Republican governor says he is backing revisions of the state’s insurance system because it costs too much. His plan, unveiled earlier this year, would guarantee a one-year reduction of $125 in annual auto insurance premiums.
Reform legislation, however, stalled following House passage months ago. The governor and House Speaker Jase Bolger, R-Marshall, say they want to get the legislation moving again.
The Citizens Research Council report, released Oct. 14, said auto insurers pay more than health insurers for medical services in Michigan and that accident victims use more medical services here than in other states. It said the state’s “generous coverage ... undoubtedly causes (auto insurance) to be more expensive.”
Cornack and other coalition officials take issue, arguing collision repair coverage is the big driver of auto insurance premiums. They also note Michigan’s insurance industry has reported the average vehicle insurance premium decreased $15 between 2005 and 2010, the most recent years for which statistics were unveiled.
The statistic calls into question the assertions by no-fault insurance reform proponents that vehicle insurance costs are spiraling upward, said Michigan Health and Hospital Association Vice President Laura Appel.
She said other states may cut auto insurers’ tab for injury treatment by limiting coverage, but it doesn’t mean the costs go away. In other states, the costs of care for people with catastrophic injuries just get transferred elsewhere — to private health insurers or Medicaid, for example — or they have to be absorbed by health care providers, Appel said.
“The cost of that injury is the same as in Michigan ... the only difference is what pocket you pay it out of,” she said.
Coalition officials said they’re willing to look at cost-saving concessions, such as a dollar limit on catastrophic coverage.
But to establish that limit, they said, policy makers need full access to Catastrophic Claims Association data. The private nonprofit association releases limited information and doesn’t open its books to the public.
The Coalition Protecting Auto No-Fault is in court seeking access to claims data that forms the basis for the MCCA’s annual fee on auto premiums.