Fight to Save Auto No-Fault

THE FIGHT TO SAVE AUTO NO-FAULT

May 10, 2011

On March 24, 2011, two bills introduced in the Michigan Senate (SB 293 and SB 294) were referred to the Senate Committee on Insurance. If enacted, these bills would fundamentally change the basic nature of the Michigan auto no-fault system.

Senate Bill 293 -- PIP Cost Shift

1.  Insurance companies would be authorized to sell auto policies with maximum no-fault personal injury protection (PIP) benefits as low as $50,000. Higher limits would be available for higher premiums. Victims suffering catastrophic injury resulting in medical expenses higher than the selected limits – including children who never had the right to choose – would be forced to turn to Medicaid, Medicare, or health insurance, thus increasing the burden on Michigan taxpayers and the health insurance system.

2.  Persons who do not own automobiles, and thus have no insurance coverage or who do not live with relatives who have no-fault insurance coverage, would be limited to $50,000 of no-fault PIP benefits. This would create a potential for great economic hardship for senior citizens and disabled people who do not drive, forcing them to turn to Medicaid or Medicare and again increase the burden on Michigan taxpayers and the health insurance system.

3.  Victims who incur medical expenses in excess of the PIP benefit limits they selected would be able to sue the at-fault driver for the excess expenses, thus increasing litigation and leaving many consumers with no choice but to buy higher liability insurance protection, thereby increasing insurance premiums.

4.  Workers who draw no-fault PIP benefits under insurance policies issued to their employer, would arguably be limited to the coverage chosen by the employer regardless of whether the worker chose to purchase higher coverage on their personal auto insurance policy.

5.  Most no-fault PIP claims paid through the Assigned Claims Facility would be limited to $50,000 of coverage, thereby increasing the burden on health insurance, Medicaid, Medicare, and ultimately the taxpayers.

6.  More no-fault claims would be paid on a coordinated basis, thereby requiring many accident victims to first exhaust their health insurance coverages before no-fault benefits would be payable.

7.  Medical providers serving severely injured patients who selected inadequate PIP benefit limits would no longer be able to provide services, thus resulting in a significant loss of jobs in the health care industry and a reduction in access to necessary medical care.

Senate Bill 294 – Home Care and Fee Schedules

1. Benefits payable for attendant care or nursing services rendered to an injured person in his or her home are subject to two caps:

a)      A weekly hours cap – This cap would limit payment for in-home attendant care and nursing services to no more than 56 hours per week if performed by an individual who is not certified, registered, or licensed to render such care.

b)     An hourly rate cap – This cap would limit payment for in-home care performed by an individual who is not certified, registered, or licensed to render such care to no more than $11 per hour for “basic care” and no more than $17 per hour for “skilled care.” If the services are performed by an individual who is certified, registered, or licensed to render such care, payment for such services could not exceed $17 per hour, which is far below the standard commercial rate.

Both caps are applicable to family provided in-home care as well as in-home care rendered by commercial agencies and hospitals.

1.  Workers compensation fee schedules will be applicable to every physician, hospital, clinic, institution, or other person rendering treatment to auto accident victims. No provider charges in excess of those set forth in the workers compensation fee schedules would be compensable. This would result in a significant loss of revenue for major Trauma Centers, a reduction in medical services, and a loss of jobs. 

2.  The provisions dealing with in-home care and fee schedules are applicable immediately upon passage of the bill, regardless of whether the patient sustained injury in an automobile accident occurring before the bill was passed. In other words, the new rules would apply retroactively to all existing claims.

CONCLUSION

Senate Bills 293 and 294 are a clear confirmation that the Michigan auto insurance industry desires to effectively repeal Michigan’s model no–fault insurance system. If these bills are enacted, the consequences would be dire and would include, among other things, the following:

Increased Taxes – resulting from a massive cost shift from no-fault insurance to Medicaid and Medicare.

Increased Health Insurance Costs – resulting from massive cost shifts from no-fault insurance to health insurance coverages.

A Loss of Jobs – resulting from diminished reimbursement to medical providers who treat severely injured accident victims.

Reduced Access to Medical Care – resulting from unfunded essential medical and rehabilitation services.

Increased Insurance Premiums – resulting from the need to purchase higher liability insurance to protect consumers from increased exposure to liability for a victim’s unfunded medical expenses.

Increased Litigation – resulting from victims suing at-fault drivers for unfunded medical care.

Limited Insurance Coverage – for seniors, disabled people and those who do not drive resulting from statutorily mandated minimum coverage for non-motorists who have no household auto insurance coverage.

It is important to note that there is absolutely no guarantee in these bills that insurance companies would significantly reduce auto insurance premiums and keep those premiums reduced for a significant period of time. Stated differently, the loss of essential insurance benefits resulting from this legislation would be permanent, while any rate relief that may occur would likely be minimal and temporary. 

In short, these bills are bad for drivers,

bad for taxpayers and bad for Michigan!