No-fault reform would leave crash victims vulnerable

A few years ago I found myself sitting in the back seat of a burning Jeep, stunned and not breathing.

It was a late summer night, and my friend had taken his eyes off U.S. 31 long enough for the Grand Cherokee I was riding in with two other friends to veer off the road to hit a concrete culvert. The truck did three end-over-end front rolls like a cheerleader doing flips down a football field sideline.

Our battery was found 100 feet away. The engine block was gone. All that was left was the four of us, speckled with glass cuts, crawling from a bent-framed flambé in a field south of the Mackinac Bridge.

One thing I remember distinctly was not being able to draw a breath and the strange surprise that we had rotated fast enough to have my flip-flops vanish.

The paramedics came and we all went to the hospital, where by some unsolved physics problem, none of us were hurt more than some cuts and swollen ribs.

Mostly, I never think about that accident, though I distinctly remember spending the rest of the summer waiting tables to pay off the tab for the ambulance and emergency room visit.

Something reminded me of it last spring though, when a woman called me about her opposition to the plan to reform no-fault insurance in Michigan.

The woman’s son had crashed a car, and the 20-something son hadn’t been so fortunate. He is paralyzed and has permanent brain damage. The long-term costs for medical care had run into the millions of dollars, despite the woman quitting her job to provide care.

Michigan – luckily for her and her son – requires drivers to pay for unlimited long-term injury care through annual fee to the Michigan Catastrophic Claims Association, which begins paying out to injury claims after costs exceed $500,000.

Those payments mean higher car insurance premiums in Michigan. And a renewed debate in Lansing is questioning just how much drivers in Michigan should be paying up front for insurance and how much should be left to health insurance.

The legislation saw renewed interest from the House Insurance Committee in October, where the revised language would cap unlimited injury payments at $1 million starting Dec. 31, 2013.

State Rep. Pete Lund, R-Shelby Township, introduced the reform last April, but the bill has gotten mixed support from his party since, regardless of being a priority for the governor.

The bill would create a new fund that only kicks in after medical bills exceed $530,000 starting in 2014 and would stop at the $1 million cap. Motorcycle accident victims (helmet or sans helmet) would be capped $250,000 in additional costs and non-state residents at $50,000.

Similar legislation in the Senate, introduced by Sens. Virgil Smith, D-Detroit, and Joseph Hune, R-Hamburg Township, would cap the personal injury protection at $50,000.

Essentially, some lawmakers think the rising cost of insurance in Michigan is unsustainable.

“Michiganders have seen their auto insurance rates rise faster than any other state in the country," Gov. Rick Snyder said in a statement when the legislation was introduced. "These changes will create a policy that continues to cover accident victims far better than any other state and will create cost controls that stem the tide of rising insurance premiums while also providing immediate relief for families."

House Democrats collectively opposed Lund’s bill in the spring, including House Minority Leader Tim Greimel, who said the GOP was “more interested in giveaways to big insurance corporations than helping Michigan citizens who have life-changing injuries.”

The debate is less about politics and more about who should pick up the check for severe-injury crashes in Michigan.

Last year, drivers in Michigan paid a record high $175 for the annual No Fault insurance fee. Advocates point to the rising fee as one of the key reasons Michigan has some of the nation’s highest coverage rates.

The public affairs research nonprofit Citizens Research Council of Michigan reignited the reform debate in October with a report showing auto insurance rates are 17 percent higher than other states in Michigan and that medical costs associated with accidents are 57 percent more expensive – despite being one of 12 other states with mandatory or optional no-fault insurance.

While those figures will likely serve as fuel for a debate on how to keep auto insurance costs down, lawmakers might also want to remember voters defeated referendums in 1992 and 1994 to change no-fault insurance and take a look at the growing medical costs that would be shifted to taxpayer-funded programs like Medicare and now the Affordable Care Act for 1.3 million uninsured residents.

About $10 billion has been paid by the Michigan Catastrophic Claims Corporation on 12,836 claims in Michigan from 1981 to 2012, according to a House Fiscal Agency report. About a third – 4,349 claims – exceeded $1 million (the proposed cap) totaling about $8.1 billion, the report notes.

It doesn’t take long to figure out why insurance companies would like to shift the cost away from car insurance fee-generated payouts and onto private health coverage, or why the groups like the Michigan Health and Hospital Association vehemently oppose the reform plan.

Ramming through a cap on no-fault insurance this fall would be a mistake for drivers and passengers in Michigan. Lawmakers need to take a serious look at the people the Michigan Catastrophic Claims Association has covered and have a real debate about how to lower insurance rate while not leaving the most vulnerable people in our population without sufficient medical care.

While lawmakers might win a few votes and campaign favors with cheaper car insurance, they would be passing the buck to taxpayers who may or may not even own a car.

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Comments

Richard Burney
Sun, 11/03/2013 - 9:41am
The legislative logic behind this is finance based, not patient care based, and if pursued will lead to a deterioration of not only patient care, but also the trauma care system in the state. The most expensive patients to care for are those with head, spinal cord, and disabling orthopedic injuries that render these patients permanently disabled. I think it is reasonable to ask whether no fault insurance should be paying for secondary, disability-related medical issues 5 or 10 years after a motor vehicle crash. It is not reasonable to cap expenses at an arbitrary number, such as 1 million dollars, which can be used up in 6 months while a patient is still in the early stages of recovery. If the issue is reducing long-term expense, it would make more sense to consider a 5- or 10-year limit on coverage, while looking at what the actual needs of these patients are 5 or 10 years out, and how those needs will be addressed, On the other hand, $175/year is pretty cheap for what we get in return, about the same as your annual auto registration fee.
Jon Dom
Mon, 11/04/2013 - 10:56am
I think it's ridiculous for Michigan drivers to still have to pay for this through vehicle insurance, now that we have the miracle of the AFA to shift the cost to the federal level.
Barb Megerian
Mon, 11/04/2013 - 5:08pm
I'm not in favor of any change in long-term auto injury insurance and the costs for families of the injured. Let's look at the insurance industry and the Michigan Catastrophic Claims group first to see what might be done to reduce or contain costs. Surely, families with victims of accidents need enormous sums We need to consider the citizens and not the insurance companies..
Peter Lea
Tue, 11/12/2013 - 1:18am
Keep in mind, these catastrophic injuries are life long. They don't just leave scars. Life as each of these unfortunate individuals formerly had is gone forever. The auto insurance policies which covers their life long needs as the result of their accidents was not an option. The Catastrophic Claims fees for this contract are mandatory. Your auto insurance has never gone down nor will it in the future. If you bought your auto new off the lot. Your insurance was never reduced by the time you got rid of it. As you've gotten older your insurance has never gone down. The same if you've been a safe driver. Yet the auto insurance industry wants to terminate these contracts without Grand Fathering per-existing victims than placing caps them and all future victims. This breech is not what was represented and paid for and should not be considered. Auto No-Fault Reform does nothing for Michigan drivers. It will allow Michigan Catastrophic Claims Association to loose it's Non-Profit status and become a Corporation. Eliminating liability and gaining a tax shelter. Which will take mandatory catastrophic premiums paid for every legal vehicle driven on Michigan roads away from the people of this state and place it in to the hands of a Corporate Insurance industry. To further increase profits for an already very profitable insurance industry. Reform will shift responsibility for life long needs resulting from vehicle accidents on an already under funded Medicare, Medicaid, Veterans and social programs and a plagued Obama Care which do not cover all these life long needs. That's why we pay insurance. These unfortunate individuals with catastrophic injuries are not filing claims as a result of poor prenatal care, sports injuries, falling out of a tree, or some illness. Every one of these accidents involved a legally registered and insured motor vehicle. We shouldn't have choose between living on welfare or deserting these injured individuals. 24 hour care which is needed for some cases will not even be allowed to be provided by a family member. 16 of those hours must be provided elsewhere as the insurance industry decides with an added $200 deductible per month . So the quality of care and quality of life comes to an abrupt end. These individuals and their families will have no choice in the matter. There is no area in the long list of reforms that does not reduce the protection for the victims. You will pay about $10 less each month on your insurance policy but only for the first year and but saving you a cent. Our taxes will go up to pay for the social programs, insurance premiums will not remain down and the only entity to benefit will be the insurance industry.
Joe Smith
Tue, 12/03/2013 - 11:28pm
Let us not make a gift of our funds in the Michigan Catastrophic Claims Administration trust fund to the fat cats of the insurance and banking industries. Many of these outfits are now owned by foreign interests in Middle Eastern countries that sponsor terrorists seeking to harm us. I have a handicapped relative who was brain damaged many years ago. The insurance industry sold his parent the insurance policy that featured unlimited Personal Injury Protection full in the knowledge of the policy selling insurance corporations' potential liability in case of a catastrophic claim, so the rates were adjusted accordingly. Rates for this have actually gone DOWN over the years for the MCCA assessment on auto policies, and NOT up. The fact is that the insurance companies TOOK the money for the policies, and they SET the rates for these policies. For years our insurance regulators have been dominated by former employees of the insurance companies they purport to 'regulate', and by obviously bought and paid for shills of that same industry, so the idea that rates were somehow 'held down' is a patent lie on its face. We paid the premiums and the companies agreed to the contracts we all both signed. And now the insurance industry through its bought and paid for republican politicians want to welsh on these signed contractual agreements under color of changes of law. In any other venue this would be felonious subornation of perjury and fraud, not to mention attempted violations of the insurance monopoly's fiduciary responsibilities by means of illegal ex-post-facto changes in the governing laws in order to illegally defraud existing PIP claimants.