Modified No-Fault Reform Bill Passed by Michigan House Insurance Committee
The Michigan House Insurance Committee has approved a modified version of a bill reforming Michigan’s no-fault insurance law that was recently passed by the Michigan Senate. Although this bill has made more progress than other recent attempts to reform Michigan’s no-fault law, it is still being met with a great deal of controversy.
Under Michigan’s no-fault law, all drivers pay a fee of $186 per vehicle each year, which goes to the Michigan Catastrophic Claims Association (MCCA). When a person is catastrophically injured in a car accident and their medical expenses total over $535,000, the MCCA starts covering the person’s medical expenses. There are no limits to the amount of benefits a severely injured person can receive or how long they can receive them. Michigan is currently the only state in the country to offer these unlimited benefits. Some people believe the costs of no-fault benefits are responsible for making auto insurance so expensive in Michigan and efforts to reform the no-fault law are an attempt to reduce the costs of insurance.
The original bill approved by the Senate Insurance Committee called for hospitals and doctors caring for people catastrophically injured in car accidents to be compensated at the same rates as they would be for worker’s compensation cases. The new version approved by the House Insurance Committee tied the compensation rates to 150% of the Medicare reimbursement rate.
Hospitals have a set schedule of fees they charge for specific services, but the amount of money they accept as payment depends on who is paying for the care. The Insurance Institute of Michigan claims this is unfair to auto insurance providers because they are being charged more than other insurance providers for the exact same services, which in turn, drives up insurance premiums for consumers.
Many medical professionals say the proposed reimbursement rates would mean a massive financial hit for Michigan hospitals. Ed Bruff, president and CEO of Covenant Healthcare in Saginaw, called the bill, “the most devastating piece of legislation I’ve ever seen.” He says that if the bill is passed in its current form, it would force his hospital, and other hospitals in Michigan, to make drastic cutbacks, jeopardizing the quality of care people severely injured in car accidents receive. Many of the injuries covered by no-fault benefits are brain and head injuries, which frequently involve long hospital stays and long-term care.
The new version of the bill would allow trained healthcare professionals who take care of patients in their homes to bill more than the $15 per hour other home attendants, such as family members, would be allowed to charge.
Critics say the bill only helps to protect the profit of insurance companies at the expense of severely injured car accident victims. The modified bill would require auto insurers to reduce rates by $100 per vehicle for two years. Oakland County Executive L. Brooks Patterson is been a vocal critic of the bill, calling it, “totally irresponsible” and “a fool’s bargain.” He went on to say, “Senate Bill 248 drastically cuts reimbursements that directly impact health care for survivors of catastrophic accidents in exchange for a two-year $100 per-vehicle premium reduction. There are no guarantees — the insurance companies are asking us to ‘trust them.’”