Lansing — A new bipartisan state House plan to rein in the high cost of Michigan auto insurance would create price caps for some medical providers, establish a new authority to fight fraud and prohibit insurers from using “non-driving factors” to set premiums.
The pending legislation, announced Thursday by 15 state legislators, is not backed by Republican leadership. But it marks the opening salvo in what is expected to be a heated fall debate over reforming the state’s unique no-fault auto insurance law.
“Michigan drivers and accident victims deserve accountability and best practices from the insurance companies and health care providers alike,” Rep. Ben Frederick, R-Owosso, told a large crowd outside an annual Brain Injury Association of Michigan meeting.
House Speaker Tom Leonard, R-DeWitt, has been working with Detroit Mayor Mike Duggan, a Democrat, on a separate plan that has not yet been finalized but could give motorists the option to buy lower-cost plans that cap lifetime medical benefits.
The “fair and affordable no-fault reform” package announced Thursday would not change the unlimited lifetime medical benefits currently provided for Michigan motorists in catastrophic car crashes. Instead, the proposal takes a broad approach to addressing what Frederick called a “complex web” of other factors that can drive up costs.
“We can guarantee a rate reduction of 20 to 30 percent for Michigan drivers without reducing benefits,” said Rep. Tim Greimel, D-Auburn Hills. He has introduced a separate proposal that would mandate rate reductions to reflect those estimated cost savings, but a Democratic spokesperson said it is not part of the new bipartisan package.
Any proposal that requires rate reductions or sets hospital fee schedules is sure to face resistance in the state Senate, where Majority Leader Arlan Meekhof, R-West Olive, has compared the practices to “price fixing.”
“I’m fully in favor of rate rollbacks, but just not mandating the government rolling them back,” Meekhof told reporters last week.
The new plan is backed by the Coalition Protecting Auto No-fault, which has published recent reports alleging auto insurers are charging Michigan women more than men with identical driving records, and charging working-class residents more than white-collar peers.
“It’s wrong,” said Rep. Sherry Gay-Dagnogo, whose bill would prohibit insurers from using factors like gender, zip codes and education levels to set rates. “I’m not saying women are better drivers than others, I’m just saying it’s not fair to charge us more.”
The package would set reimbursement fees at 185 percent of workers compensation for medical providers that treat injured motorists, but it would exempt Level 1 trauma facilities at some of the state’s larger hospitals, such as Beaumont in Royal Oak and Henry Ford in Detroit. It would also establish new limits on home attendant care for crash victims.
The proposal calls for a new authority to fight fraud committed by both claimants and insurance companies, said Rep. Joe Graves, R-Argentine Township. It would also force transparency by applying the state Freedom of Information Act to the Michigan Catastrophic Claims Association, which currently charges motorists $170 a year to reimburse insurers for large claims.
Leonard is not backing the new proposal but welcomed the focus on the issue.
“Speaker Leonard has been saying for years the price of admission is to come to the table with an actual plan, and for years CPAN has refused to do so,” said House GOP spokesman Gideon D’Assandro. “They are finally changing tactics, and I think that speaks to how much progress we’ve been able to make in the House and how close we are to getting something done.”
House Insurance Committee Chairwoman Lana Theis, R-Brighton, also welcomed the plan and said she thinks fraud, a lack of accountability for medical provider charges and a lack of coverage options for motorists have driven up costs.
But “many of the elements of the plan outlined earlier today will not reduce the cost of auto insurance, and in fact will likely make matters worse,” Theis said in a statement.
In the Senate, Meekhof continues to push a plan advanced late last year that would have created a fraud authority, limited paid “attendant care” hours for family members of auto accident victims and capped benefits in assigned claims cases involving uninsured motorists or pedestrians.