House panels amends, OKs no-fault insurance reforms

Gary Heinlein
The Detroit News

Lansing — The House Insurance Committee passed fast-moving legislation Thursday that would revamp Michigan's no-fault auto insurance system, sending it to the House floor following three days of meetings packed with opponents.

The final version of the bill package contained changes of Senate-approved legislation to blunt some criticism, but they didn't appear to appease those who argued lawmakers are ruining the nation's best coverage for victims who suffer profound, life-altering injuries in vehicle crashes.

"Whatever we do here, the people should be allowed to vote on this," said Ann Arbor public insurance adjuster Craig Trombley, whose 22-year-old son needs high-level care that has cost more than $700,000 so far for traumatic brain injuries he suffered July 4 when he was hit by a car.

But the legislation includes a $150,000 appropriation that would block a public vote on the changes — should they be approved into law — because appropriations bills aren't subject to voter referendums. Twice in the past, Michigan voters have rejected proposed no-fault insurance changes.

Committee-passed revisions include a two-year $100-per-vehicle insurance rate rollback and reimbursement for care of crash injuries at 150 percent of the federal Medicare rate. Care providers average 120 percent to 130 percent of the Medicare rate from private insurers, said Rep. Tom Barrett, R-Potterville, sponsor of the changes.

The legislation still contains limits on payment for the in-home care many crash injury victims must have, often around the clock. Opponents argue such limits don't consider the unique needs of each patient and will compromise the care they receive.

Barrett's revisions are intended to address criticism that the legislation wouldn't lower insurance premiums much but would so severely limit reimbursement for injury treatments that patients would be driven to the Medicaid health coverage system for the poor.

Rep. Tom Leonard, R-DeWitt, the insurance committee chairman, said the rate rollback will save $700 million annually for Michigan's 7 million insured drivers.

Barrett also noted the legislation, which creates a new version of the Michigan Catastrophic Claims Association, retains Michigan's unique system of unlimited benefits for people who suffer the most serious crash injuries costing more than $545,000.

The new version of the catastrophic claims association would be led by a seven-member board and subject to Michigan's open meetings and freedom of information provisions. The existing association also would remain for however long it is necessary to continue funding care for crash victims already in the system.

An organization of care providers and injury advocates called Coalition Protecting Auto No Fault, or CPAN, has a case before the Michigan Supreme Court seeking to open the books of the current Michigan Catastrophic Claims Association.

The catastrophic claims association tacks an annual fee on all auto insurance premiums to create the revenue that pays for care of crash victims with extensive injuries. It recently announced the fee will drop from $186 to $150 on July 1.

CPAN leaders accuse Republican lawmakers of hurrying to pass no-fault changes insurers want before the high court reaches a decision. A ruling in favor of open records could force the association to reveal data showing catastrophic care costs aren't the main reason Michigan's vehicle coverage premiums exceed those of nearby states, they say.

Changes to the no-fault system long have been sought by insurers and businesses who say its rising costs are unsustainable and are making Michigan's auto insurance prices uncompetitive.

Republican Rep. Ed McBroom testified it's been one of his constituents' top concerns since he came to the Legislature in 2011.

McBroom, from Vulcan near the Upper Peninsula's western border, said some constituents are moving to Wisconsin, or buying auto insurance by using business addresses there, to avoid Michigan's higher premiums.

The statement prompted Rep. Derek Miller, D-Warren, to ask whether Michigan residents buying Wisconsin auto insurance weren't committing insurance fraud.

Wendy Block, who lobbies on health and human services issues for the Michigan Chamber of Commerce, said the proposed changes would encourage more insurers to do business in Michigan, increasing competition and lowering rates for auto insurance.

But most Detroit lawmakers oppose the changes, which they say wouldn't significantly reduce nation-leading auto insurance rates exceeding $10,000 a year for residents of Michigan's largest city. They blame insurers' use of other rate-setting factors, such as zip codes and level of education.

The amended legislation was sent to the House floor over the objections of Democrats on the House Insurance Committee. Leonard held more than seven hours of hearings over three days on the bills, which had sped through the Senate on a close vote after a single committee meeting.

Leonard said he's committed to hearing from anyone who wants to offer views on the legislation and still is willing to make changes prior to a final House vote, which won't occur until at least next week.

"I am willing to work with anyone any time to address one of Michigan's biggest problems," Leonard said.