Our editorial: Fix no-fault, don’t scrap it
Some lawmakers want to give up on fixing Michigan’s no-fault insurance law and instead scrap it and return to a tort system in which motorists sue each other to recover damages.
The frustration by these Republican legislators is understandable. They spent nearly all of 2017 trying to forge an agreement on no-fault reform, and walked away empty handed.
Meanwhile, insurance rates in Michigan continue to soar. With an average annual policy cost of $2,610, auto insurance premiums are the highest in the nation, according to industry surveys, almost double the national average of $1,427.
The reason is simple: Michigan is the only one of 18 no-fault states that provides unlimited lifetime medical benefits for those injured in automobile accidents.
A proposal offered last year by Detroit Mayor Mike Duggan, whose residents pay rates that are often double the statewide average, would have allowed motorists to choose lower cost policies with caps on medical coverage.
Providing unlimited benefits with no fee schedule for the services provided and very little oversight of claims has created a hugely expensive system rife with fraud and mismanagement.
Even so, the best option is still to fix no-fault — not jettison it altogether.
The most effective fix is the one proposed by Duggan — capping lifetime benefits. Opponents of limiting the payouts argue that doing so will deny accident victims the treatment they deserve and hamper their recovery.
But all of the other no-fault states have caps, without that doomsday scenario playing out. Once the auto insurance benefits are expended, health insurance benefits kick in.
Most other states also have fee schedules to set rates for services provided to accident victims, and restrictions on what treatments are covered. Michigan has neither, meaning victims can demand payment for just about anything they feel is necessary for their recovery.
While no-fault was supposed to keep the settlement of auto accident claims out of the courts, lawsuits have climbed, thanks to rulings by the state Supreme Court expanding the types of personal injury claims that could be filed.
Returning to a pure tort system will drive up the cost of claims and work against the goal of reducing insurance premiums.
Lawmakers should keep trying for fair and effective reform of Michigan’s no-fault system.
A fix is possible that places reasonable limits and cost controls on the benefits for accident victims, without denying them the essential services they need.
No-fault as currently structured has not worked in Michigan. In fact, based on the cost of policies, it has been a disaster.
Lawmakers need to step up.
Putting the right fixes in place would make no-fault live up to its original promise in Michigan, as it has in the other states where it is the law.