Lansing — Michigan seniors could save money on auto insurance by choosing plans with limited medical coverage under legislation the Senate approved Thursday.

The proposal is the latest attempt to change no-fault auto insurance rules in Michigan, which is the only state in the country that requires unlimited lifetime medical coverage for all drivers. Michigan is routinely among the nation's most expensive states for auto insurance rates.

The Senate package, now headed to the House for consideration, would also create a new anti-fraud authority, limit insurer payments on home care for auto accident victims and cap medical coverage for pedestrians or passengers in uninsured vehicles.

The plan is not as aggressive as prior auto insurance reform plans debated in the House or Senate, but is “a step forward that our citizens of Michigan desperately need,” said Sen. Joe Hune, R-Fowlerville, who sponsored one measure in the two-bill package.

The proposal would give residents age 65 or older who are eligible for Medicare the option to purchase auto insurance plans with $50,000 in personal protection benefits or traditional plans that would continue to include unlimited medical benefits.

Most Democrats voted against the package. They argued it falls short of the comprehensive solution needed to reduce rates for all drivers and does not require that insurers cut rates for seniors who choose to buy lower-coverage plans.

“Insurance companies would be the winner in this, giving you only $50,000 in coverage but still charging you the same amount,” said Sen. Morris Hood, D-Detroit. “That potentially could happen.”

But Hune said seniors would save at least $161 a year because they would be exempt from most of an annual Michigan Catastrophic Claims Association fee used to reimburse insurers for major no-fault claims that cost more than $555,000. That fee is set to rise from $170 to $192 on July 1, but seniors would only be required to pay a small portion under the legislation.

The Senate proposal faces an uncertain future in the House, where Republican Speaker Tom Leonard of DeWitt last year partnered with Detroit Mayor Duggan on a larger reform plan that would have provided medical coverage choice to all drivers and capped fees hospitals could charge auto accident victims. 

The Duggan-backed plan failed in the House last fall, another setback in a decades-long battle that has featured intense lobbying by the insurance industry, hospitals and accident attorneys. A Detroit group is trying to revive the debate by running billboards mocking lawmakers for inaction and promoting a revised “driver’s choice” proposal.

“I’d like to do auto insurance reform for everyone,” said Sen. Rick Jones, a Grand Ledge Republican who sponsored the senior choice bill. “Unfortunately, the House has been unable to find the votes, so let’s start with the seniors, many who live on a fixed income.”

The legislation would create a fraud authority within the Department of Attorney General to help state or local law enforcement agencies investigate suspected insurance fraud. The authority would operate until 2024, unless future lawmakers vote to extend its life.

The Senate plan seeks to limit insurer costs by capping payments for “attendant care” by a family or household member. After the first 56 hours in a week at flexible rates, payments would be capped at $15 per hour regardless of the level of care provided. Multiple attendants could not bill for more than 24 hours in any single day.

The proposal would also cap “assigned claims” at $400,000 for pedestrians and other people involved who are involved in an auto accident but not actually in a car, along with passengers in an uninsured vehicle.

An earlier version of the legislation would have replaced the Michigan Catastrophic Claims Association with an entity subject to the Michigan Freedom of Information Act, but the transparency proposal was dropped from the bill.

Senate Minority Leader Jim Ananich, D-Flint, said Republicans threatened to withhold budget funding he requested for his hometown when he introduced an amendment that would have required insurers to cut rates 10 percent for seniors who choose to purchase reduced medical coverage plans.

“Their unwillingness to even have a vote on savings for consumers says a lot about the reality of this package, that it wasn’t really about saving money,” he said.

Ananich suggested Senate Republicans may have voted on the proposal just to say they tried. He does not expect it to pass the House.

“I know the system we have now needs to have major changes to it, and I think everyone’s going to have to take a haircut,” Ananich said. “In order to make sure the ratepayers get reasonable insurance they can afford, we’re going to have to sit down and tackle it like policy makers should.”

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