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Lansing — Democratic Gov. Gretchen Whitmer and Republican legislative leaders are locked in a high-stakes battle over a push to reform Michigan’s no-fault auto insurance system to cut highest-in-the-nation consumer rates.

Whitmer doubled down Thursday on her threat to veto GOP overhaul proposals, including sweeping legislation the House approved at 2:09 a.m. that would allow insurers to sell policies with reduced medical coverage but require them to reduce that portion of an auto premium for five years.

Standing a few feet away from House Speaker Lee Chatfield at an unrelated event, Whitmer argued the bill does not go far enough to ensure consumer savings and does not explicitly prohibit insurers from using non-driving factors like ZIP codes to set rates.

“The bill that passed last night preserves a system that allows discrimination,” the governor said as Chatfield, R-Levering, looked on. “There is no guarantee that rates will actually roll back for everyone. It lacks any consumer protection whatsoever.”

House Republicans contend their proposal does each of those things. While the Senate GOP resisted a rate rollback mandate in a plan passed Tuesday, the House version would require insurers to reduce personal injury protection rates in the policies they sell for five years, depending on coverage levels a consumer chooses to purchase.

“There’s some confusion because we have given (Democrats) everything they’ve asked for in this bill,” Chatfield later told reporters. “There are guaranteed rate reductions for all drivers in the state of Michigan in the bill that we passed last night.”

Both plans would end the state’s unique mandate that auto insurers guarantee unlimited lifetime medical benefits for injured motorists. It's a requirement critics contend primarily drives up rates in Michigan but supporters say ensures high-quality care for victims of catastrophic crashes.

The House proposal would not directly prohibit insurers from using non-driving factors to set rates, but it would empower the state Department of Insurance and Financial Services to create rules to do so if “there is no rational correlation between the factor and insurance losses.”

Republicans maintain they are focused on policy, not politics, but predict Whitmer could face voter backlash if she rejects legislation that would provide rate relief for which motorists are clamoring. They have not yet agreed on a final version to send to her desk.

"I would be surprised if she didn’t receive a few hundred thousand phone calls and emails and text messages" from disappointed voters if she vetoes a reform bill, said Senate Majority Leader Mike Shirkey, R-Clarklake.

Link gas tax hike, no fault changes?

Whitmer made clear neither plan meets her standards and challenged Republicans to reach across the aisle to negotiate a final product. The governor again suggested a potential link between auto insurance reform, which is a top priority for legislative Republicans, and her own push to raise fuel taxes 171% to fund road repairs.

“They can either negotiate in good faith and send me a good bill that actually protects consumers, while we also continue to negotiate a budget that fixes the damn roads, or they can send one of the current bills to me that fails to protect Michigan drivers, and we can start all over again,” she said.

Chatfield and Shirkey have both chafed at the idea of a “grand bargain” that would pair auto insurance reforms, the annual state budget and some variation of Whitmer’s proposal for a 45-cent per-gallon fuel tax increase. Michigan's current gas tax is 26.3 cents per gallon. 

“The people of the state of Michigan want real rate relief, and the people of this state of Michigan do not support a 45-cent gas tax,” Chatfield said. “I can certainly walk and chew gum at the same time, but I will not trade good policy for bad.”

House Republicans hailed their auto insurance proposal as a “landmark” win for motorists. But Democrats accused the GOP leadership of reneging on promises of bipartisan engagement and argued the legislation has loopholes that could allow insurers to skirt rate rollback rules, which would be temporary.

House Minority Leader Chris Greig, D-Farmington Hills, said Republicans had vowed a collaborative approach to auto no-fault insurance reform in a new committee. Instead, House Republicans unveiled an 82-page plan at 7 p.m. Wednesday, added amendments throughout the night and approved it without any public hearings.

“I am sad to say that my colleague, the speaker representing the city of Levering, looked in my eyes and lied,” Greig said in a floor speech moments before her microphone was cut off. “We deserve better.”

Republicans say they've debated similar proposals for months, if not years or decades, and Chatfield said he wanted to strike as soon as it became clear there was enough support to advance the bill. 

"We have failed to have the votes for this for 30 years," he said early Thursday. "The votes were there, people are fed up with the high cost of car insurance, and it was important that we act swiftly."

Interest groups weigh in

Powerful interest groups that have helped stall previous attempts to reform Michigan’s 1973 no-fault auto insurance law have also criticized the new plans in whole or part.

“To be frank, this bill stinks,” said Michigan Health and Hospital Association CEO Brian Peters said about the House plan. “The Legislature should start over and take the thoughtful approach they claimed they would from the beginning.”

Both proposals would create a “fee schedule” for medical providers, capping reimbursement rates for auto accident insurance claims at levels currently charged under worker’s compensation.

Republicans argue the mandatory fee schedule would prohibit price gouging by medical providers whose care costs can depend on the type of insurance a victim carries. But critics contend it would stress an already bloated health care system and threaten the financial solvency of specialists.

The legislation “addresses the major culprits driving up the cost of auto insurance in Michigan,” said Tricia Kinley, executive director of the Insurance Alliance of Michigan industry group. But “we have serious concerns with the arbitrary rate and regulatory mandates that will be counterproductive to the goal of saving drivers money.”

The Senate plan did not include mandated rate rollbacks, and Shirkey said the government imposition approved by the House is “not something I wanted.” But “working with the insurers and understanding what their latitude is, I think that there’s a landing spot for something,” he told reporters.

A total of five state House and Senate Democrats voted for the separate reform plans. Four are from Detroit, where Mayor Mike Duggan has long advocated for auto insurance rate relief and supported local candidates who share that goal.

"We are getting closer and closer to a solution on car insurance," Duggan said Thursday at an unrelated event. "We're not there yet, but what the House passed yesterday will reduce for the average Detroiter $1,500 a year. That's how big of a deal it is."

The mayor said he is hoping for more changes before lawmakers send a bill to Whitmer's desk. "There's still some non-driving factors like credit scores and the like that will create inequities between Detroiters and suburbanites on the rates," Duggan said. "But it's a long way down the road, and we need to finish that up."

GOP: Plans are 'historic'

Senate leaders will assess the differences between the two bills over the weekend, but Shirkey said the plans share a common goal: “Doing things that drive down the cost for auto insurance in Michigan.”

The Clarklake Republican said he hopes to speak with the governor and eventually stand “shoulder to shoulder” with her to celebrate the reform. But he wouldn’t commit to any specific changes to the legislation that would earn Whitmer’s support.

The legislation’s passage through both the House and Senate “is historic in every dimension,” Shirkey said, suggesting more Democrats might be willing eventually to support reforms but “may have received some pressure not to show support yet."

Republicans have an opportunity to return to committee and find a path forward to good reform armed with the versions from the both the House and Senate, said Senate Minority Leader Jim Ananich, D-Flint.

It would be unfortunate if the bill served only as “a game of chicken with the governor” rather than a real attempt at reform, Ananich said. House Republicans “walked our way on rate reduction,” he said, but more could be accomplished with further input from both Republicans and Democrats.

“They’re used to doing it the way they’ve been doing it for the last eight years,” Ananich said. “That’s just not going to happen anymore. We’re going to be a part of making this bill better.”

The bill’s passage through the House, the first time in roughly 40 years, is historic, said Sen. Tom Barrett, who likened the early morning passage to the fall of the Berlin Wall. In the past, many Oakland County Republican lawmakers opposed no-fault reforms at the urging of Oakland County Executive L. Brooks Patterson, but they all supported the Senate and House plans. 

Like Shirkey, the Potterville Republican said the reform was the fruit of dozens of hours of committee testimony and years of wrestling with the issue. While neither plan has seen robust debate in committee, there is little to no new discovery that could be made through public hearings, he said.

“Having new committee hearings on something that we’ve already had a dozen or more committee hours of testimony on already I think is just a delay tactic,” Barrett said.

joosting@detroitnews.com

Staff Writer Christine Ferretti contributed. 

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