DMC, Duggan clash on Detroit auto insurance plan

Chad Livengood
Detroit News Lansing Bureau

Lansing — Mayor Mike Duggan is at odds with his former employer at the Detroit Medical Center in his legislative battle to let Detroiters buy lower-cost auto insurance coverage with limited medical benefits.

Duggan's "D-Insurance" bill gained approval from the Senate Insurance Committee Wednesday with changes that would let other cities with 35 percent uninsured drivers allow insurers to sell plans capped at $250,000 in car injuries. Claims above that cap would be directed to a driver's health insurance.

But the DMC, where Duggan was CEO from 2004-12, opposes the Detroit mayor's bill because it eliminates unlimited catastrophic coverage for drivers who suffer brain and spinal cord injuries, said Conrad Mallett Jr., chief administration officer of the hospital system.

"D-Insurance is not going to be the panacea for the people that live in Detroit … that the mayor believes," said Mallett, a Detroiter who worked under Duggan for eight years.

The DMC treats drivers with severe brain, spinal and neurological injuries from car accidents at its Rehabilitation Institute of Michigan.

"We believe that access back to the catastrophic insurance fund is critical," Mallett told The Detroit News. "We are with the mayor on everything but this."

Duggan, who has met with Detroit hospital leaders in the past week, downplayed the impact to the DMC's bottom line and care to patients.

"It has only a marginal impact on the hospitals," Duggan said Wednesday. "The hospitals will still be able to charge their triple Blue Cross rate."

The years-long battle over reforming Michigan's no-fault auto insurance system rests with the level of long-term care insurers should have to cover for treatments and therapies after hospitalization.

Duggan's insurance plan has been introduced as an alternative to making statewide changes to the insurance system, which passed the Senate last month but has stalled in the House after intense lobbying against the bill by hospitals and rehabilitation centers.

"It's a pilot project ... that maybe someday other areas of the state could follow," said Sen. Rick Jones, R-Grand Ledge.

Duggan, a Democrat, is trying to keep the Republican-controlled Legislature focused on his narrowly tailored legislation, which does not include caps on the amounts hospitals can charge for individual procedures like the bill stalled in the House would do.

"This doesn't have nearly as dramatic of an effect on the hospitals as the earlier bill," Duggan said.

Duggan's bill focuses on lowering Detroit's 60 percent rate of motorists illegally driving on city streets and freeways without insurance.

The Detroit mayor argues his plan, which would be voluntary for drivers, could cut insurance premiums by one-third or $1,000 for the typical car owner in the city.

"We think the great majority of the financial abuses are coming post-hospital," Duggan said. "I don't believe the hospital is where the problem is."

Mallett said he remains unconvinced that Duggan's plan will really drive down the cost of Detroit's highest-in-the-nation auto insurance rates.

"We'd be glad to be part of the conversation, but for the life of me as someone who lives and works in the city of Detroit I have to say I'm unconvinced," he said.

The committee amended the legislation Wednesday to allow any city with an uninsured rate of at least 35 percent to petition the state insurance commissioner to allow insurers to sell lower-cost plans with less benefits. The original version of Duggan's proposal set the threshold at 50 percent.

The committee voted 5-3 to advance the bill to the Senate floor.

Sen. Bert Johnson, D-Highland Park, said the new threshold should allow his hometown, Hamtramck, Ecorse, River Rouge, Inkster, Pontiac, Benton Harbor, Saginaw and, possibly, Flint to participate.

Sen. Margaret O'Brien, R-Portage, voted for the bill but expressed disappointment that it would be limited to drivers in urban cities with high concentrations of poverty.

"Poverty knows no municipal lines," O'Brien said.

Under the bill, drivers who opt to buy a lower-cost, cut-rate auto insurance plan would surrender any right to make a claim to the Michigan Catastrophic Claims Association, a fund all drivers pay into for coverage of life-altering vehicle injuries.

"There's going to be some huge heartburn on the part of medical providers," said Johnson, who supported the bill.

But Johnson argues the DMC and other hospitals will ultimately benefit from having more Detroit drivers with insurance they can afford.