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Lansing — Auto insurance industry officials and three key state lawmakers fired back Thursday at what they said are falsehoods being spread by opponents of a Senate bill that would revamp Michigan’s unique system of no-fault coverage.

“One of the sides has been distorting the facts,” said Senate Majority Leader Arlan Meekhof, R-West Olive, at a press conference called by backers of the no-fault reform plan they say will make auto insurance rates more affordable.

The bill sponsor, Republican Sen. Joe Hune of Hamburg Township, and Senate Finance Committee Jack Brandenburg, R-Harrison Township, also attacked what they charged are untruths. Most of their criticism was aimed at Michigan hospitals’ ad campaign against the bill that began last weekend.

The hospital association says the legislation, which would replace the Michigan Catastrophic Claims Association with a government-funded public agency, would give insurers $1 billion in new profits while slashing guaranteed crash victim care.

Brandenburg handed out a rate comparison chart he said illustrates that hospitals are “gouging to the tune of 300 percent or more” on their emergency room rates and other charges to treat auto-insurance-covered vehicle crash victims compared with patients covered by Medicare or workers’ compensation.

His chart says, for example, rates charged to provide auto insurance-covered “moderate medical complexity care” at Detroit, Lansing and Grand Rapids hospitals ranged from $255 to $297, whereas Medicare payments averaged about $61 to $66 and workers’ comp payments averaged about $91 for the same level of care.

Hune said he, other lawmakers, insurers and representatives of Gov. Rick Snyder’s administration held months of meetings, which included health and hospital officials, seeking a compromise plan. Snyder has said he favors reforms to lower insurance rates.

Michigan’s no-fault auto insurance system includes an annual assessment — currently $186 per vehicle but dropping to $150 July 1— to fund that coverage through the Michigan Catastrophic Claims Association. The assessment is tacked on to annual auto insurance premiums.

Laura Appel, hospital association senior vice president, denied the ads contain distortions. She said for a promised rate reduction amounting to $8 a month for two years, “drivers will be asked to pay into a new, underfunded, unregulated entity for people catastrophically injured in auto accidents” under Hune’s bill.

The bill would replace the Catastrophic Claims Association, Appel said, with an entity that wouldn’t be subject to insurance laws and could fail, leaving victims of severe crashes without funding.

Under federal law, Appel said, hospitals must charge the same rates to everyone. But they negotiate contracts determining actual payment rates individually with third party payers, including auto insurers, “based on volumes and other considerations,” she said.

Hune’s bill would retain the unlimited injury coverage but set limits on rates hospitals would be paid for treating auto insurance-covered patients. It was revised by the House Insurance Committee last week to include a guaranteed $100-per-vehicle rate reduction for the first two years it is in effect.

But House Speaker Kevin Cotter, R-Mount Pleasant, put a House vote on hold this week amid reports it was well short of the support needed for passage. Democrats and some of the 63 Republicans in the majority in the 110-member House were publicly opposed.

Last weekend, the Michigan Health and Hospital Association began airing TV ads costing nearly $800,000 that feature a woman who was severely injured in an auto crash and benefited from the Michigan’s unique no-fault setup.

Pete Kuhnmuench, executive director of the Insurance Institute of Michigan, said the segment of the insurance industry providing auto coverage has become unprofitable and some companies have been driven out of the business. He said Hune’s bill represents an effort to “reduce the cost of our product” without dramatically changing what’s special about Michigan’s no-fault coverage.

gheinlein@detroitnews.com

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