The target of decades of redlining, Detroit is now the bulls eye for a special pilot program designed to deceptively provide cheaper auto insurance rates in exchange for losing lifetime, unlimited medical benefits in the event of a serious auto accident. Detroiters must ask themselves whether it’s worth it to give up such valuable benefits to shave off roughly $125 from their auto premiums.
The Detroit pilot program is connected with Michigan House Bill 4936 and Senate Bill 649 (a combination of SB 293 & 294), which are bad bills that will leave the injured without care if drivers don’t select super expensive policies with medical coverage of $500,000 and up. The bills are two new pieces of legislation introduced in Lansing that promise to lower insurance premiums in the short term but will effectively dismantle Michigan’s no-fault auto insurance system as we know it and here’s why:
Under the proposed legislation, once a person runs out of benefits they get shifted to Medicaid and other state programs, which is a risky proposition in light of the current political climate. It adds insult to an already injured Detroit that has been disproportionately affected by cuts in state programs.
Under the current no fault auto system that was adopted in 1973, insured drivers contribute to the Michigan Catastrophic Claims Association (MCCA) fund that allows all insured drivers, passengers and pedestrians to access uncapped personal injury protection or “PIP” benefits. PIP covers the cost of reasonable and necessary medical care, products, and services—including potential lifelong care. We’ve had this system for nearly 40 years, it is not broken and there is no need to fix a system that says drivers don’t sue in most accident cases in exchange for lifetime medical coverage.
Billed as “consumer choice plans” HB 4936 and SB 649 are being sold as a way to capture more insured drivers by allegedly offering cheaper insurance, controlling costs and giving consumers more of a say in the coverage they want. But, the reality is that insurance companies cannot and will not guarantee there will be a decrease in premiums if the bills pass. And we could end up getting rid of this protective coverage and not saving one dollar.
Retroactivity is another troubling aspect of the bills when it comes to provisions dealing with in-home care and fee schedules, which are applicable immediately upon passage of the bills regardless of whether a patient sustained injury in an automobile accident before the bills are passed. In other words, the new rules would apply retroactively to all existing claims. The bottom line is that HB 4936 and SB 649 will be devastating to automobile accident victims, and will also destroy thousands of jobs in the brain and spinal cord rehabilitation industry that is unique to Michigan.
These bills propose to allow Michigan drivers to purchase as little as $50,000 of personal injury protection (PIP) coverage and reduced medical benefits. But, proper care of a person who has sustained a brain or spinal cord injury in an auto accident costs much more than $50,000.
I have met with doctors and representatives of major health care systems and they all say no-fault auto reform is a bad deal for Michigan. In contrast, insurance companies say lifetime, unlimited medical benefits under Michigan’s current auto no-fault system is unsustainable. But, Detroiters have paid more than their fair share of insurance costs after years of redlining, and insurance companies should not be allowed to bail out on Detroiters or any Michigan consumer simply because they’re tired of paying out coverage that can mean the difference between life and death.
Finally, HB 4936 and SB 649 are nothing more than bad pieces of legislation designed to repeal Michigan’s model no-fault insurance system that’s pro-public policy because it’s pro-people.