Uncategorized — October 19, 2011 at 12:02 pm

Correcting a misconception regarding No-Fault insurance “reform” in Michigan


I received this comment on my latest piece about impending No-Fault insurance reform in Michigan from “Jabbo”. It displays a complete misconception regarding this so-called reform that I think is worth dispelling.

I am all for the no-fault reform bill. I am tired of paying for other people to be irresponsible. I have worked since I was 12 years old and I am 43 now. It is my responsibilty to purchase adequeate coverages to protect myself and my family. Unlimited lifetime medical is to costly for the people that actually pay continuously for their insurance while others pay 1 or 2 payments and let their policies cancel but not before milking the sytem with fraudulent claims. Interesting how the only people I see blogging about this reform are personal injury attorneys and long term care facilities. They are only worried about their pockets being affected by this reform.

First of all, I have blogged about this more than once and I am neither a “personal injury attorney” nor an employee or owner of a “long term care facility”. I just want to be clear about that so Jabbo’s comment is off-base in that regard.

The key misconception made by Jabbo is assuming this is an issue about people letting their insurance lapse. This not the issue at all. The issue is whether or not people should be required to purchase insurance that covers lifetime benefits or should be able to purchase coverage with a limit as low as $500,000.

His misunderstanding of the nature of the reforms being considered notwithstanding, Jabbo implies that it is a person’s own responsibility to purchase enough coverage and, if they don’t, well, that’s on them and they should pay the price. The problem is that they aren’t the only one to pay the price. We will ALL pay the price for people catastrophically injured in an automobile accident if their coverage expires. Why? Because, once they become destitute, their medical costs then become everyone’s responsibility. From first piece on this issue:

[A]ccording 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.

That $30 million annual cost increase to Medicare becomes everyone’s responsibility and we will pay for it in higher taxes and/or a reduction in services elsewhere to make up for it.

Jabbo’s opinion reflects one many people have that says you are responsible for your own life and must pay the consequences if you screw up. The problem is that they clearly don’t realize that these costs will inevidibly be paid by society unless we require people to have adequate coverage. And most people won’t go for the more-expensive lifetime coverage:

Accident victims at a press conference by House Democrats said severely injured motorists will end up in nursing homes if a Republican-backed bill to eliminate unlimited lifetime medical coverage becomes law. Michigan is the only state that requires auto insurance with unlimited medical coverage.

“If it was your loved one in the accident, would you like them to be stuck in a nursing home?” said Judy Guezen of Ypsilanti, whose husband, Robert Guezen, requires 24-hour care. “If this bill goes through, the only ones who are going to benefit from this is the insurance companies and possibly the nursing homes.”

A bill under consideration in the House would offer motorists less expensive insurance in exchange for limited personal injury protection coverage. Motorists could choose between $500,000, $1 million or $5 million in coverage.

“Major studies show the majority of drivers would choose the $500,000 plan,” said Rep. Phil Cavanaugh, D-Redford. “To go with $5 million the person would have to pay much more than they do now.”


Arnie Grinblatt, 53, of West Bloomfield has had to use a wheelchair since he was involved in a roll-over accident 10 years ago. He said he requires 24-hour care, which costs about $300,000 per year.

“I’ve already exceeded $3 million,” Grinblatt said following the press conference.

So, you see, opponents to this “reform”, this gift to insurance companies, are all about personal responsibility. What Jabbo and others like him do not understand is that the current law ensures people take personal responsibility. The legislation being considered by Republicans takes that away and allows people to avoid it.