GOP leader: Duggan auto insurance plan ‘dead’

Jonathan Oosting
Detroit News Lansing Bureau

Lansing – Detroit Mayor Mike Duggan’s developing plan to pair auto insurance reforms with mandated insurer rate rollbacks will be “dead, dead, dead” on arrival in the Michigan Senate, Majority Leader Arlan Meekhof said Wednesday.

As The Detroit News reported last week, the Democratic mayor of the state’s largest city has been in regular contact with House Republican leaders as he works on a proposal to lower statewide auto insurance premiums that consistently rank among the highest in the nation.

While Duggan has not yet unveiled the plan, he confirmed through his office he is working to build support for a bipartisan package that includes “major guaranteed rate rollbacks.”

But as legislators returned to the Capitol on Wednesday following summer recess, Meekhof made clear he will not support any plan that forces insurers to reduce rates.

“That’s price fixing,” Meekhof, R-West Olive, told reporters. “When do Republicans get in between a private transaction and set what prices are? The market should dictate what they are based on risk and other factors.”

Michigan’s unique no-fault auto law provides unlimited lifetime medical benefits for motorists who suffer catastrophic injuries in car crashes. Duggan wants to give motorists the option to buy reduced price policies that cap medical coverage at $250,000.

Legislators familiar with the developing plan say it could require insurers to reduce premium rates by up to 30 percent. House Republicans are also not ruling out the idea of a “fee schedule” or set fees for medical providers that would require hospitals to charge specific rates for auto crash victims.

Meekhof, who also opposes mandated hospital fees, said he and Duggan discussed the plan last week.

The mayor was “very optimistic about what he thought his plan would be,” Meekhof recounted, “and I said good luck.”

Duggan said in a Wednesday statement that he is “working very hard to build a coalition” for a bipartisan auto insurance reform plan that would originate in the House.

“Senator Meekhof has been a longtime champion of cutting car insurance rates and it's my hope that by the time we get to the Senate, we can reach agreement on a plan that has his support,” Duggan said.

The early resistance to a plan that has not yet been introduced highlights the ongoing struggle to reform Michigan’s no-fault insurance law that went into effect in 1973.

Meekhof, House Speaker Tom Leonard and Gov. Rick Snyder have each identified auto insurance reform as a top priority for the fall. Snyder has been pushing reform for at least four years but a legislative solution has proven elusive during his tenure.

Snyder backed a 2013 reform plan that would have capped medical coverage at $1 million and required insurers to reduce rates by at least $125 per vehicle in the first year. A 2015 plan approved by a House committee would have required insurers to roll back rates by $100 for two years.

Michigan premiums averaged $1,351 in 2014, the third highest rate in the country, according to a National Association of Insurance Commissioners’ report released in January. recently pegged Michigan’s full-coverage average premiums as the nation’s highest at $2,394.

Rates in Detroit and other urban areas are often significantly higher than other parts of the state.

“At the end of the day, we have to have rate relief for the citizens of this state, and that means we’ve got to leave all options on the table,” House Speaker Tom Leonard, R-DeWitt, said last month.

But Meekhof is taking options off the table in the Senate as he speaks out against key parts of Duggan’s developing plan.

Instead, the majority leader is attempting to revive momentum for a plan the Senate approved 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.

The plan taken up in the so-called lame-duck session was supported by both hospitals and the insurance industry, an alliance Meekhof likened to the “immaculate conception,” but did not receive a vote in the House.

State Sen. Curtis Hertel, D-East Lansing, said he has not had any personal discussions with Duggan but supports the idea of forcing insurers to cut rates if the state makes other reforms.

Senate Democrats last year proposed a series of amendments that would have tied rate rollbacks to the Republican reform plan.

“If we’re going to be doing a lot of giveaways to the insurance companies, which I think quite frankly some of this stuff is,” Hertel said, “we should at least make sure it’s being passed on to the people.”