Opinion: Mitigating adverse effects of car insurance reform
We have been told by Michigan Gov. Gretchen Whitmer and the state Legislature that the auto insurance reform bill signed into law in late May will make auto insurance more affordable. Not only may that not be true, but the fallout could include increased bankruptcies for residents, layoffs and an overall atmosphere of increased litigation adversely impacting consumers.
However something can still be done. Legislation that curbs the ability of insurance companies to fix the system to their choosing is needed — or simply put, residents injured in automobile accidents won’t get the quality of care they deserve.
That’s because this new bill will incentivize insurance carriers to delay all payments for medical care. Why? There’s no penalty for not paying the healthcare providers in a timely manner. It even allows carriers to pay a retroactive (i.e. cheaper) bill if they delay to July 2021.
Insurance carriers now can also force a patient to go to their preferred network of doctors. This takes away the ability to let the motorist – or his or her family – choose where and from who they will receive care. It’s another example of insurance carriers and not patients dictating treatment options.
Removing the lifetime benefits provision for motorists who have suffered a catastrophic vehicle accident will fundamentally change the structure for how medical bills are paid, by whom, and how much. This could have a disastrous impact on the majority of residents.
Without sister legislation to combat it, some of the outcomes of this reform bill aren’t going to help most consumers. The first reason is that the huge burden of the health costs may fall on the consumer as their health care bill is unlikely to cover many of the costs.
Second, while the premiums for one set of insurance bills (automotive) may fall, the cost of premiums for many health care policies for Michigan residents, and employers is likely to rise. That’s because health care insurers operating in Michigan generally have not had to pay out the same level of claims for auto accidents as other states.
Third, bankruptcy rates are likely to rise because medical providers either won’t get paid their fair share, or perhaps not at all, for care following an auto accident. They will not be able to operate profitably when a huge percentage of their reimbursements will be through Medicare, forcing them to sue their own patients to receive reasonable and customary charges above the Medicare rate.
Limits to attendant care will come with other issues as well, especially when an injured motorist is elderly and/or lives alone.
The issue of high insurance costs isn’t easily solved with the new law, but perhaps Whitmer and the Legislature can speak with people on the front lines – victims, family members, doctors and nurses – to understand supplemental language that seeks to limit the ability of insurance carriers to control the system.
Yes, auto insurance has been way too expensive here in the state. But it might be difficult to explain to Michigan residents in the coming years why the new law wasn’t anywhere near the panacea many thought. There’s still time to combat some of the bigger issues.
Kevin Green is the managing partner of Bashore Green Law Group in Pontiac, a personal injury, family and business law firm.