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Whitmer, GOP leaders talking amid auto insurance impasse, veto threat

Jonathan Oosting
The Detroit News

Royal Oak and Troy police investigate a multi-car crash on Crooks Road at Meijer Drive.

Lansing — A standoff between Democratic Gov. Gretchen Whitmer and Republican leaders could come to a head Tuesday as they discuss proposals seeking to cut Michigan auto insurance rates that routinely rank among the highest in the nation.

Whitmer met Monday with Senate Majority Leader Mike Shirkey and is expected to meet again Tuesday with House Speaker Lee Chatfield following last week's vow to veto separate plans approved by each chamber. 

If they are unable to agree to terms or a path forward, the GOP-led Legislature could force the issue by finalizing a plan on its own and sending it to Whitmer's desk, perhaps as early as Tuesday afternoon.

A House proposal approved last week in a late-night session and now awaiting Senate action would end Michigan’s unique promise of lifetime medical benefits for injured motorists, allowing insurers to sell reduced coverage policies but reduce personal injury protection premium rates for five years.

Republicans touted it as a “landmark” plan to save motorists money, but Whitmer said she does not consider the legislation a “reasonable, fair” way to provide immediate rate relief and strong consumer protections.

Hospitals, brain injury specialists, rehabilitation facilities and other health care providers are urging Whitmer to hold fast on her veto pledge, citing likely coverage reductions and a proposed fee schedule that would cap their reimbursement rate at worker’s compensation levels.

In their Monday meeting, the governor and Shirkey, R-Clarklake, discussed "working together towards solutions addressing both the state's infrastructure crisis and auto insurance reform over the weeks ahead," said Whitmer spokeswoman Tiffany Brown. 

"The governor has always made clear she is willing to work with anyone who is willing to work with her," Brown said. "The administration looks forward to ongoing discussions to find real solutions that improve our roads and benefit Michigan residents." 

Lawmakers have spent decades debating reforms to the 1973 auto insurance law, and with the House and Senate both advancing their own plans, “I think this is closer than state government has been in over 20 years,” said Rich Studley, president and CEO of the Michigan Chamber of Commerce.

The chamber, which is supporting the reform effort, had been pushing Whitmer, Shirkey and Chatfield to meet and attempt to resolve differences.

“There are three people who can solve this problem now, and they’re all very knowledgeable and very capable,” Studley said.

Whitmer has not spelled out specific changes she’d like to see but wants to explicitly prohibit insurers from using non-driving factors such as ZIP codes or credit scores. The bill would empower the Department of Insurance and Financial Services to create rules to do so if “there is no rational correlation between the factor and insurance losses.”

Chatfield is “willing to meet with the governor any time,” said Gideon D’Assandro, a spokesman for the Levering Republican. “He is committed to making sure this gets done and gets done soon. We can’t let politics get in the way of real reform. We’re too close.”

Jim Haveman, who served as health director under Republican Gov. Rick Snyder, called the proposal a “gift” to the insurance industry and is encouraging Whitmer to reject the plan if it reaches her desk in hopes of spurring more robust negotiations in the future.

He predicted the House proposal would "gut" medical providers and accused GOP leaders of  “ramming and jamming” the proposal through the Legislature to avoid outcry from crash victims who could lose benefits or access to care.

"They didn’t want that testimony," Haveman said. "They didn’t want to see people come in in wheelchairs or stretchers."

Health officials sound alarms

Michigan is the only state in the nation that requires auto insurance to include unlimited lifetime medical benefits for catastrophically injured patients.

The House plan, which the Senate is considering, would allow insurers to sell plans with $500,000, $250,000 or $50,000 in personal injury protection. Consumers with private or public health insurance that covers auto crash injuries could opt out of the medical coverage altogether.

The plan would also mandate a fee schedule for medical providers, which House Republicans argue will prevent "widespread abuse and patients being forced to pay three or four times what a medical service actually costs." 

Health care officials deny price gouging claims and expect most motorists would choose the cheapest auto insurance plan that could purchase, especially low-income drivers who already qualify for Medicaid and could instead rely on that coverage.

For hospital trauma centers, that means nearly half of the auto crash victims they treat could be covered by either Medicaid or Medicare, which already mandate reimbursement rates that are “less than the cost of delivering services,” said Laura Appel of the Michigan Health & Hospital Association.

The proposed workers’ compensation fee schedule for crash victims with auto insurance would “barely over the cost of delivering care and we would argue does not keep up with the increasing cost of pharmaceuticals and technology,” she said.

The hospital association estimates the government-mandated fee schedule could cost Level 1 and Level 2 trauma centers a combined $325 million a year. There are 41 such facilities in Michigan, including pediatric specialty centers.

Phillip Weaver, CEO of Hope Network in Grand Rapids, said the Christian nonprofit rehabilitation center would likely lay off 525 employees in the first six months if the “one-sided” House plan were to become law. 

“That’s pretty dramatic,” he said. “Nobody thinks about the consequences when they’re taking votes.”

Hope Network Neuro Rehabilitation has treated people with traumatic brain and spinal cord injuries for four decades, but “basically we wouldn’t be allowed to take in any new patients because the reimbursement rates would be much lower than what the cost of the actual services are,” Weaver said.

Tom Constand, president of the Michigan Brain Injury Provider Council, said some sort of reimbursement cap may be appropriate for the treatment of auto crash victims, but he suggested that fee schedule should be based on the type of care that is provided.

Unlike a broken arm that will heal, “things like a brain injury or a spinal cord injury require a lifetime of care,” he said. “And that’s where we’re concerned about charging a rate such as workers compensation for the intensive care, the intensive work that needs to be done on an ongoing basis for these people.”

Ian Vedder, co-owner of Soteria Home Health attendant care company in Grand Blanc, said he currently has one patient on workers compensation that pays around $19 an hour but could not afford others.

“It’s almost impossible for me to provide care” at that rate, he said. “I don’t have the revenue to be able to provide high-quality staff. It’s just not something that’s feasible.”

Cost savings

Michigan is one of 12 states that have a no-fault auto insurance law intended to limit lawsuits by ensuring damages are paid. A handful have medical provider fee schedules linked to workers’ compensation or Medicare, including New York, which requires $25,000 in personal injury protection.

In most states, “you use your health insurance or Medicaid or whatever else it is in case of an accident, or you sue and get the other guy to pay for it,” said Eric Lupher, president of the non-partisan Citizens Research Council of Michigan

“The path before (lawmakers), as it relates to the health care aspects of the law, are to find a way to rein in the costs, and what they’re proposing will achieve that,” Lupher said of the House and Senate plans. “There are alternatives, but it’s a valid way to do it.”

House Republicans project their plan could save a motorist between $120 and $1,200 on average, depending on the level of personal injury protection they choose to purchase.

The proposed reforms could shift some health care costs from auto insurers to private or government-run health insurers.

The Senate Fiscal Agency projects the House plan — like the Senate version — would increase state Medicaid costs each year as more drivers without unlimited auto insurance coverage rely on commercial or government-run health insurance.

“In many severe injury cases (in which the accident victim became dependent on long-term care), costs would shift to Medicaid as most people do not have long-term care coverage beyond the limited coverage provided to Medicare recipients,” the agency said.

That shift could cost the state about $65.9 million in additional yearly Medicaid costs by 2029, according to projections  If drivers are “less interested in unlimited” personal injury protection, “then the increase in Medicaid costs would be greater,” the agency said. 

But the current system is “about to collapse” and residents are “mad as hell" about their premiums, said Studley, who is hopeful Whitmer and GOP leaders will negotiate a plan all sides can live with.

“You can’t have a so-called no-fault system that is riddled with lawsuits,” he said. “You can’t have a system where you have tens of thousands of people who are breaking the law every year because they can’t afford — literally cannot afford — to purchase the insurance that is required by state law.”