Editorial: Find a fix for 'no fault'

The Detroit News

Changes are underway for Michigan's "no-fault" car insurance law. Michigan is the only state that requires all parties in a reported accident to claim responsibility for injuries and medical claims — even if that means unlimited, lifetime medical coverage. That has driven up insurance costs and rates.

The Michigan Chamber of Commerce, which supports insurance reform, estimates Michigan drivers pay 20 to 35 percent higher insurance rates than neighboring states. Detroiters pay the highest auto insurance rates in the country.

The system needs reform, and some changes are in the works. The Senate passed a bill last week that would reduce costs system-wide and still maintain the level of coverage currently provided.

Currently, the Michigan Catastrophic Claims Association pays for lifetime medical treatment over $530,000. These uncapped benefits are paid for by an annual $186 per vehicle fee that will decrease to $150 on July 1.

Under the Senate bill, the association will be replaced with a new seven-member group, appointed by the governor, to oversee claims now above $545,000.

The legislation would also change how insurers pay hospitals and other health care providers for injuries. Insurers now often pay up to two to three times as much as workers' compensation rates or rates charged to private health insurance carriers. Those costs ultimately get passed onto drivers.

The new fee system would allow negotiation between parties, and help end discretionary billing practices.

A provision to cap costs for in-home attendant care for family members who take care of an injured family member should also help reduce costs.

Another longstanding problem with Michigan's insurance program is fraud in both insurance certificates and medical claims. A one-day snapshot from July 2013 of paper insurance cards submitted across Michigan found 16 percent were invalid. Certain counties had more fraud than others, but Metro Detroit had the most.

Fraudulent medical claims also increase system costs, no doubt incentivized by the lifetime guaranteed coverage. In Detroit between 2009 and 2011, questionable medical claims from accidents jumped 124 percent.

This legislation forms a Michigan Automobile Insurance Fraud Authority to work on the problem.

Detroit's rates are pushed higher due to carjackings and auto theft. It's also estimated 60 percent of Detroit drivers don't have auto insurance, which shifts extra costs onto drivers who do.

Mayor Mike Duggan has proposed forming a city government insurance company that would offer plans for less than those sold by private companies.

It's an admirable idea, but the city shouldn't be in a non-core business with costs that could rob other basic services.

The proposed reforms would lower costs for all Michigan residents, while providing adequate medical coverage when needed. It's time to move forward with some version of this common sense legislation.