“Reforming” no-fault insurance in Michigan: the GOP’s gift to insurance companies

NOTE: updated to correct info about Sen. Joe Hune, Rep. Pete Lund and the House & Senate versions of the bill.

Michigan’s no-fault auto insurance is the GOP’s current target for reform. In what can only be described as a gift to auto insurance companies, they are looking to remove the requirement for unlimited lifetime coverage for victims of auto accidents. The claim is that this will save Michigan insurance purchasers (i.e., auto owners) so much money that our pockets will be filled and the world will be set right once again.

Problem is, it’s a bunch of lies. The fact is that, outside of Metro Detroit, the average cost to Michiganders for auto insurance is similar to the national average of $1,000 per year or less for a single vehicle. However, if a person is involved in a catastrophic car accident requiring lifetime care, the proposed lifetime cap will shift the costs to our social welfare system, ensuring that all of us pay more in the end. In fact, according to a recent study, Michigan Medicaid costs could rise by $30 million in the first year if this cap goes through.

A new study concludes that Michigan’s Medicaid program could spend an additional $30 million during the first year if the state Legislature approves bills to change the state’s 39-year-old no-fault automobile insurance law.

One of the provisions of the four-bill legislative package would allow drivers to choose different coverage levels for personal injury protection, or PIP, including one as low as $50,000.

Michigan drivers now pay $145 annually and receive lifetime unlimited injury and rehabilitation benefits.

“Our major conclusion based on the findings of our report is there is no compelling reason to reduce the coverage at this time,” said Jane Powers, vice president of Public Sector Consultants, the Lansing firm that conducted the study.

Interestingly, the sponsor of the Senate version of the bill delivering this gift to insurance companies, Sen. Joe Hune, has frequently talked in interviews about benefit choices starting at $250,000. However, when legislation was introduced, the lowest coverage level was $50,000. The Senate bill is SB 649.

The House bill, HB 4936 sponsored by Rep. Peter Lund, also has a little suprise tucked into it in the form of a $50,000 appropriation for a “study” on the effect of the new law. Why did he put this in there? Because appropriations bills are not eligible for citizens’ referendums where they are put on the ballot for Michigan citizens to vote on. Citizens’ referendums on our no-fault insurance rules happened in 1992 and 1994 when voters smacked the “reforms” down. Lund, Hune and their Republican friends in the Legislature don’t want any chance of that happening again.

This “reform” has been highly contentious. Legislators are reporting that they have never been lobbied so hard on any other issue this year. Yesterday, after a couple of weeks of hearing testimony, the bill was passed out of the House Insurance Committee on a mostly party line vote and now goes to the full House for consideration.

If you’d like to learn more about this new legislation, I commend your attention to the website of the Coalition to Protect Auto No-Fault (CPAN). There you can keep up to date on the bill, learn the facts about this GOP gift to insurance companies and find out how you can take action. There are links there for contacting your state legislator. PLEASE TAKE A MOMENT TO CALL YOUR LEGISLATOR AND TELL THEM TO VOTE NO! ON THIS BILL.

Hat tip to JC who provided me with copious amounts of information on this topic.

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