Michigan Speaker of the House Jase Bolger (Chris Farina / The Detroit News)
Lansing — House Speaker Jase Bolger has unveiled a complex new auto insurance reform proposal that would put a $10-million cap on crash victim medical benefits and offer modest-cost, reduced-protection coverage for low-income residents.
Seeking to break a legislative logjam, Bolger, R-Marshall, said Thursday his new plan bows to objections from the many opponents who’ve rejected past efforts to revamp Michigan’s unique no-fault system that provides limitless coverage for treatment of accident victims’ injuries.
The $10-million limit, one of several savings measures in the new proposal, would be high enough to include all but a very small portion of the severest injuries, Bolger said. “A couple handfuls” of higher claims averaged $12.7 million, he said.
“We have addressed every single (reason for) opposition we have heard,” Bolger added. “We listened.”
The plan contains elements he said would wring out costly litigation and collections activities that currently are sucking up a quarter of the money Michigan drivers pay for auto insurance.
Michigan families “are saying they no longer can afford auto insurance” because the medical portion of coverage has risen 51 percent in a decade, driving up premiums, Bolger said.
But major critics of earlier auto insurance reform proposals saw no magic in the latest edition, slamming it in prepared statements issued minutes after the House speaker described the key provisions.
Coalition Protecting Auto No-Fault President John Cornack said Bolger is “pressing forward with changing the state’s auto insurance system without the necessary data.” CPAN repeatedly has accused the Michigan Catastrophic Claims Association of keeping secret data it uses to assess drivers special fees to cover the cost of care for victims with the severest auto crash injuries.
Michigan Hospital Association President Spencer Johnson said the proposal “would replace a well-established, successful private system in the Michigan Catastrophic Claims Association with a new state government no-fault bureaucracy and a new tax on Michigan drivers for Medicaid.” The plan includes a $25 per-vehicle tax or fee to cover a shortfall in the state share of government health care coverage for low-income Michiganians.
While the plan “contains many good ideas,” it also creates objectionable “government-imposed rollbacks” at odds with free-market concepts, added Tom Shields, spokesman for the Michigan Insurance Coalition, a Lansing-based trade association. Bolger’s plan would require a two-year, 10-percent cut in Michigan drivers’ tab for auto insurance coverage.
Key elements of Bolger’s reform proposal include:
■ The $10-million cap on medical care for accident victims instead of no-limit coverage. But the Catastrophic Claims Association would remain and handle all claims exceeding $500,000. The payout aspect of its operations would be subject to new transparency rules.
■ Motorists with incomes up to 133 percent of federal poverty guidelines, however, wouldn’t have to buy $10 million worth of medical coverage. They could buy lesser policies with a $50,000 limit on Medical coverage — after which their health insurance would have to take over any added treatment costs.
■ Built-in savings would include direct Catastrophic Claims Association payouts for medical claims, rather than reimbursing insurers as now; payments to doctors and hospitals set at 125 percent of workers compensation rates, provided claims are paid within 30 days; and a state insurance fraud authority to crack down on unscrupulous claims.
Bolger said Michigan’s system would remain the nation’s most generous with a medical coverage ceiling 200 times that of the next-highest state, New York, at $50,000. But the plan would save more than $200 a year, at least for two years, for a family whose auto insurance premiums now cost $2,500 a year, Bolger said.
Other industry reaction was cautious.
Peter Kuhnmuench, executive director of the Insurance Institute of Michigan, said the plan has many similarities to earlier reform plans insurers have backed, but also has significant new wrinkles.
Its personal injury protection coverage caps, medical reimbursement levels and rate rollback “will require serious consideration by the state’s auto insurance companies to determine how it will impact their business and customers,” he said.