Opinion: New car insurance law breaks promise to Michiganians

John Cornack
Michigan Gov. Gretchen Whitmer signs historic no-fault auto insurance reform legislation.

Earlier this year, legislators and Gov. Gretchen Whitmer reached an unprecedented agreement to reform Michigan’s widely misunderstood no-fault auto insurance system.

Everyone knew that premiums were too high. Everyone agreed changes needed to be made to punish bad actors and reduce fraud — whether it was committed by health care providers or big auto insurance companies. And while I’m sure legislators made a good-faith effort to improve the system, it’s become crystal clear that the new law needs to be tweaked in order to protect all Michigan consumers.

The old no-fault system represented a promise to Michigan drivers. It meant that you would receive the care you needed as long as needed — even if that is a lifetime — in the event that you were injured in an auto accident. The new law breaks that promise by requiring drivers to choose between different levels of protection, rather than providing guaranteed lifetime coverage. While $250,000 worth of coverage may sound like a lot, that amount can be used up in a matter of days in catastrophic situations.

You may think that your health coverage will make up that gap, but that’s not true. Health insurance plans typically do not cover much of the post-acute care needed for those catastrophically injured in an auto accident.

In return for giving up your coverage, you might expect to see a huge decrease in your premium. While it’s true that the law requires a percentage reduction off the statewide average for the Personal Injury Protection portion of your bill, that’s only one portion of the overall premium. Plus, the law calls for a dramatic increase in the amount of liability coverage you must buy — a different portion of your bill. Even the auto insurance industry has admitted that overall premiums may increase for many Michigan drivers.

We’re also deeply concerned that access to care will be impacted, as the new law will force rehabilitation centers across the state to shut down. The law includes an arbitrary fee schedule that forces rehabilitation providers to slash the amount they charge insurance companies by nearly 50%. No business could withstand a 50% reduction in revenue — they will be forced to shut their doors, leaving thousands without jobs, hurting local economies.

These closures will certainly force programs caring for catastrophically injured patients to transition patients out of residential programs with no current alternative. Thousands will be impacted. And injured patients around the state unable to get the care they need.

The Michigan Capitol

These issues are just the tip of the iceberg — there are other significant problems with the new law that need to be addressed. We know there is a long road ahead of us as we work with legislators to make much-needed improvements. But we’re taking our first steps Sept. 25 when we march at the Michigan Capitol to make sure the Legislature hears us loud and clear: We need to protect the right to recover. 

John Cornack is the president of the Coalition Protecting Auto No-Fault.