Don’t roll back Michigan no-fault insurance protections

Michiganders share in the value of taking care of one another. It’s in our DNA as evidenced by our leadership in donations to take care of others and the multitude of outreach efforts reported in the media almost every day.

In 1973 the Michigan Legislature put that shared value into practice with the passage of No Fault Auto Insurance legislation. That law lifts victims of catastrophic injury out of the quagmire of our healthcare system. By design, “no fault” insurance requires care that meets the victim’s needs as dictated by their injuries. Cost accounting rules and singular for-profit principles of the private insurance marketplace play no role in care decisions.

Recently legislation has been introduced to solve a problem of reinsurance payouts exceeding claims and the parallel increase in auto insurance premiums. You would think that the decline in accident-related traumatic brain injury, higher occupant protections in vehicles and reduction in miles driven would lower the number and long-term liability for claims.

The causes for this premium increase are not what have been so widely reported to the public: the pejorative claim of “unlimited benefits”, rising healthcare costs, fraud and abuse. The totally out-of-control escalation in the cost for medical services plays a role but it is not primary. Care provided to the victims has improved and they are living longer, new claimants are added every year and the need for attendant care is increasing, which all contribute to increased cost.

But none of those things represent the root cause for rising no-fault expenditures. The original intent of the legislation, to insure that we take care of one another when bad stuff happens to good people, the one half of one percent of PIP claims exceeding a million dollars, is not cheap. The victims of catastrophic injuries are surviving longer and the quality of care they receive has improved. Care is monitored by medical professionals, not anonymous individuals in green eyeshades and armbands, or attorneys battling it out in courtrooms.

Medical costs in no-fault states are high since no-fault provides the care and supports deemed necessary to address the injuries sustained. The scope of services provided, as a result of the very clear and specific language in the original legislation, is far greater than is typical for standard health insurance policies. Personal Injury Protection in no-fault cases does not have the caps, predetermined fees, or arbitrary time limitations that are standard practice in the health insurance industry. (The PPACA is changing that – no caps or time limits)

Michigan chose to insure that the victims of catastrophic injuries would not endure the same fate as those in other states. Instead of requiring long and expensive litigation to receive care, often approved too late to help, imposing caps and arbitrary time limits and the inevitable cruel abandonment of those suffering in “non” no-fault states (tort based systems), we chose to take care of our own.

No-fault public policies are not the sole contributor to increases in insurance premiums. Vehicles cost more to repair, a trade off for occupant protection and fuel economy. Costs for medical services have increased at a rate far higher than inflation due in large part to the business practices of insurance companies and medical care providers, not the needs of those catastrophically injured.

Representative Kate Segal’s comment fits: “We all know we pay too much for auto insurance. Michigan has some of the highest insurance rates in the country, and a leading factor in those rates is the exorbitant collision insurance rates charged in this state - not just the no-fault insurance rates. So, rather than a special interest giveaway, why not bring some common sense, transparent reforms to our insurance system?”

A long time ago we chose to take care of one another. We should not let a singular focus on a financial “for-profit-above-all-else” attitude distort a core value that has served Michigan and America so well. As a recent Citizens Research Council Report concludes: “Policymakers should consider reforms to Michigan’s no-fault insurance that have little to no impact on accident victims but would potentially lead to significant reductions in health care spending related to auto accidents.”

A reader and public comment contributor to Bridge Magazine’s previous articles about no fault may have said it best: “We need to be asking ourselves what kind of a state do we want to be? Are we a state of human beings, building into our citizens lives compassion and responsibility to our families, or do we want to be a state catering to the large corporations who share little accountability for the human lives they are impacting with their self-serving and greedy ways.”

Chuck Fellows is a former manager with broad experience in manufacturing, logistics, purchasing, quality and leadership training and development.

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Thu, 03/27/2014 - 9:01am
I totally agree. Sadly, in too many ways, Michigan has already tracked away from its historic focus as "a state of human beings, building into our citizens lives compassion and responsibility to our families." We've had reason to be proud of our "no-fault" auto insurance for over 40 years. It would be a shame to revert to the old way in 2014.
Thu, 03/27/2014 - 9:30am
I agree also. All of the criticism seems to be aimed at the "high" medical costs. Yet the proposed "fix" will get me a rate reduction of $150.00, GUARANTEED! for TWO years. Yipee! and I no longer have life time health coverage (apparently Medicaid will pick that up, so we're still paying). If the medical coverage fund is short, raise the PIP. Wasn't that many years ago that it had so MUCH money that Governor Engler gave us all a refund! Let's look at drivers without insurance, without a drivers license and auto theft to determine why our rates are so "high". Instead of fixing something that is broken, the ROADS, we're breaking something that doesn't need fixing. I don't trust the folks in Lansing. If their lips are moving, they're probably lying.
Mike R
Thu, 03/27/2014 - 10:23am
Mr. Fellows always provides thoughtful, informed comments in response to Bridge articles. This guest column is a welcome expansion of his insights, and I applaud him for it. If we're going to address high auto insurance costs, let's address ALL of the problems, not just the ones that provide election year sound bites to rally the Tea Partiers and other "pay nothings".
Laura Vogel
Thu, 03/27/2014 - 10:45am
You make a very well-written emotional argument, but I am not seeing data to tell me what we should do. That fact remains that Michigan rates are measurably higher than our peer states. And, when you assert that "no-fault public policies are not the sole contributor to increases in insurance premiums. Vehicles cost more to repair, a trade off for occupant protection and fuel economy. Costs for medical services have increased at a rate far higher than inflation due in large part to the business practices of insurance companies and medical care providers, not the needs of those catastrophically injured", the other factors you call out are common to every state. So the difference here in Michigan is our PIP system. But you are correct that the lifetime catastrophic injured patients aren't the "problem". As pointed out in the Detroit Free Press, "...94% of personal-injury claims were less than $50,000." Addressing the waste and fraud in the 94% of the claims would go a long way. Carl Collins, Joumana Kayrouz, Goodman Acker, ... the list goes on ... know how to exploit the current unplugged holes.
Chuck Fellows
Sun, 03/30/2014 - 7:23pm
The Citizens Research Council has several very good articles. “Medical Costs of No Fault Automobile Insurance”, October, 2013. Revised. “Health Care Costs in Michigan: Drivers and Policy Options”, May, 2013. One of the difficulties in determining what is actually going on is the refusal of the MCCC to open their records, their habit of presenting material shaped to reinforce their position (understandable) and the way the Law was originally written. But the real key to escalating insurance costs for medical services is the chaotic and often nonsensical pricing structure in the medical services industry which encourages every increasing cost and waste within the industry.
J. Strate
Thu, 03/27/2014 - 11:18am
Mr. Fellows argument is strong; however, it does not speak to one problem. That's the unaffordable cost of auto insurance for working people with very low incomes, those at or even below the poverty line, who need to drive to work because of inadequate public transportation, or need a car for other reasons. These individuals often have a poor credit score. The insurance industry views them as poor risks. A person who much pay $200/mo for car insurance (no collision, no comprehensive) will be paying $2,400/year. If their income with the EITC is around 15,000, they are paying 16% of their income for car insurance. Many poor working people in Michigan simply drive without insurance. What percentage of residents in the City of Detroit either drive without insurance or use a bogus address? When governments intervene in markets and mandate that consumers purchase high quality insurance products that they can't afford, they'll find ways of evading such mandates. Mr. Fellows is also implying that working people with very low incomes, since they can't afford auto insurance, should not own cars and should not drive. They should find other ways of getting around,.
Chuck Fellows
Sun, 03/30/2014 - 7:31pm
Its not a government mandate that is the root of cost escalation. The denial of insurance coverage for the poor is the result of poor public policy and an industry focus entirely on maximizing profit. Michigan abandoned public transit beginning in the fifties and we are still unable to support public transit.
Denise Copeland
Thu, 03/27/2014 - 11:40am
Thank you Mr. Fellows for keeping the conversation going on Michigan's No Fault Crisis'. Everyone is making and contributing very thought provoking topics and concerns, which makes me feel hopeful in saving this life giving law. Lets get to the real problems and not attack our most vulnerable. If the law is broken, lets explore where, and do what we can to make this law better. Michigan should be an example to the rest of the country. We can do this. We can show the country - "Let's Roll," spoken so well by one of the hero's in our 911 tragedies.
Sue Hart
Thu, 03/27/2014 - 12:18pm
Legislatioin introduced will do nothing to truly save drivers money. Their proposition to cap the catastrophic claims only makes it more expensive by putting the government like Medicaid to pay for injured drivers instead oif car insurance companies. Michigan has the best car insurance in the country. Sign my petition to tell Legilators to leave no fauilt car insurance alone:
James McKimmy
Thu, 03/27/2014 - 2:41pm
A good friend faced the possibility of having his insured benefits removed after having been a recipient of 24 hr 7 per week care provided by his policy, which he had paid for before an accident which left him completely disabled. The insurance companies were attempting to eliminate the coverage he had paid for and collected as per the terms of his policy. This attempt to remove their liability speaks volumes of the injustice being proposed. A major change which could help bring some balance to the costs would be to permit the insurance companies to pay of the benefits at the contractual rates afforded to other types of medical insurance contracts instead of the full rates charged by the providers as is currently required in the statutes. This is a legislative solution that could brings some balance to the issues.
Rusty Towers
Thu, 03/27/2014 - 3:09pm
I agree that the legislature should leave our current humane no-fault law alone. The "savings" projected are nothing more than a sop to those who believe we owe nothing to our neighbors when catastrophic events befall them, an election-year ploy that fools citizens into thinking they would actually save money when costs would just be passed along to less responsible or remote parties than the way the law works now. Please leave it alone- ask yourself what you'd want for yourself or one of your family members if the accident disabled you or one of them? No fault or one of those states without it?
Thu, 03/27/2014 - 6:33pm
Why is no fault limited only to auto accidents? Why aren't other accidental injuries covered? For example, if Michigan is the "humane" destination of the world, why not provide unlimited lifetime benefits to someone who falls down the steps in their own home and is unable to walk, earn a living, or pay for their lawn to be mowed? Or, where are the benefits for the person who has a heart attack and can't work for the rest of their life. Oh, yes, they get SS disability, but who takes care of their "attendant" care, cleans their house, or takes them to the doc? Oh yes, one more. What about the person who is intoxicated and seriously injures themselves while operating a chain saw on their own property? Can't work forever, but why don't they get no fault? None of these severely injured people receive the "humane" treatment of the no fault system. Why not? If, as the author suggests, we "chose to take care of one another", it certainly looks like we blew it for a huge majority of the seriously injured people in Michigan.
Fri, 08/07/2015 - 5:06pm
You wrote "What about the person who is intoxicated and seriously injures themselves while operating a chain saw on their own property?" I see this as their own fault, they got themselves that drunk, and should not have been operating a chain saw that is just plain stupidity on there part. They do not deserve no fault benefits. People in car accidents are often not the one at fault yet they are left with life long injuries that are in need of life long medical care, medications, Doctor visits, therapies and so on so forth they deserve No Fault Benefits.
Denise Copeland
Thu, 03/27/2014 - 9:50pm
Having a few more hours left in my day to go back over Mr. Fellow's comments and article, I wanted to also read the many wonderful comments from Michigander's who care about our state and our citizen's. It is nice, no wonderful, to see that many of us still have a sense of pride in living and residing in Michigan. I think this pride grew out of our blue collar history, where the middle class thrived and prospered. My entire career has been spent in the insurance industry. I was a Workers' Compensation Claims Examiner for fifteen years of that forty year journey, and of that I was a claims assistant, examiner, supervisor, manager, team leader and finally a litigation specialist, which I believe, helps me to see and understand the carriers side a little clearer, and further, I have been my husbands closest caregiver for near eighteen years under the Michigan No Fault and Catastrophic System. I must say it is so hard to fight a battle where all the facts are not given, even to the point where financial data has been litigated, with a win in the courts to produce such information, only to be up on appeal from the insurance industry, in denying to produce what every Michigan Voter should be privy too. I feel angry that one of our Supreme Court Justices, The Honorable Zahara, drafted such a piece of legislation as the recent Michigan Case Law, Admire v. Auto Owners, delivering a swift and savage blow to the most vulnerable citizens on the planet, men, women and children, paralyzed and frequently harnessed with an additional injury of head trauma, resulting from an automobile accident, and calling such legislation "progress"! Shame on you Your Honor, I hope the Michigan voters do not forget your life changing sword and pen attack on the most defenseless human beings alive, the "inevitable cruel abandonment" of the same, which Mr. Fellow's mentions in his above article. It is people like Mr. Tell above who breaths out words of pride when speaking about our state, and blufox, commenting on driver's without insurance, licenses and the high costs of auto theft and broken roads that bust up our cars, causing collision costs to plague our system, who honestly have taken great thought and time in trying to help offer other ideas as to the whoa's of financial concerns the insurance companies continue to sing of. Mike R, above, brings out the "election year soundbites," which seems to be the party of deceit's mantra's these days, picking out the most vulnerable, and accusing them of the unthinkable, cheating the system. Laura Vogel with her thoughts about vehicle repairs, cost of medical services and the business practices of the insurance carriers, lends ear to the recent Detroit Free Press article claiming 94% of personal injury claims cost less than $50,000. All something to think about in my book as the medical costs and business practices of the insurance carriers have something to hide in their files and in the financial numbers they are unwilling to produce for the public's eyes. I know what is in those files, I know because I managed thousands of cases of injuries on files and I know about reserving for those files. J. Strate also makes an excellent point when referring to the unaffordable costs of auto insurance for the working people with low incomes, another point well taken when considering who we should be voting for in the months ahead. Stand Up and Fight for Michigan No Fault. Vote with Integrity and get rid of Mediocracy. Michigan Citizens and The State of Michigan deserve better than what their getting! Dee Copeland
Donna Sickels
Fri, 03/28/2014 - 7:26am
I spoke with my insurance company as to why no fault is so high, the answer I got is not because of medical bills for the rest of the person life, but because of home repairs, such as person in wheel chair, has to have kitchen and bath redone, ramp to front and back door. I can understand paying a person's medical bills that are caused by their accident, but not all medical bills. I can understand giving the person a one time amount of money for home improvement. but that is it, not support them the rest of their lives. people with disabilities, don't get all that from health insurance, our wounded warriors don't get that from the government, but an auto accident gets it all??
Denise Copeland
Fri, 03/28/2014 - 11:44am
Dear Donna, Thank you for reaching out for answers and for having the courage to post. I have been a claims adjuster for many years and in many different capacities. I am also wife and caregiver for my severely disabled husband. I tried to work in the very beginning of my husbands injury, however, after two years the problems created and the medical crisis became overwhelming. With no income now, and only our caregiver benefit, it is very hard to pay for everything that comes up. Every ten years we were allowed to fix or add modifications if needed. Trying to save for this is an upward battle with the caregiver benefit because when my husband is hospitalized this benefit stops. While he is home, I put a small portion of this benefit into savings for our rainy days of hospitalizations. Even a couple weeks takes a large portion of our monthly allowance, setting us back financially, as we have to pay our mortgage, utilities, insurances and food out of this savings. Many of my home modifications have been done by family members, which helps cut the costs for the insurance company. We buy scraps, odds and ends from neighbors, garage sales and the likes to help as well. You should also know that not every severely disabled family needs modifications. Many of the severely disabled are in facilities and nursing homes, not privy to those same modifications. Also, many times the insurance companies are denying the request for modifications, or like us, fourteen years later, we need new flooring as my husbands 500 lb wheelchair has destroyed our carpeting. I have put together an estimate, sent it to our claims examiner certified, over eight months ago, asking for a formal letter of denial if they decline my request, yet we hear nothing. My husband has been in and out of the hospital three times over the last six months. I also have to pay independent caregivers to help weekly because I can not work 24 hours a day, something many do not understand as my husband needs care around the clock, sometimes soiling himself and his sheets in the middle of the night, where it takes two or three hours to clean him up, change his sheets and more. Life is hard and money is tight. I have been on both sides if this coin and believe me, the person you talked to at the insurance company has no clue. Their comment does not tell the whole story. Thank you for allowing me to respond. Dee
Fri, 08/07/2015 - 5:20pm
First of all the No Fault Benefits DO NOT cover All Medical bills only medical issues that are from the injuries sustained from the car accident. The Insurance company has 30 days from the time you submit a bill for payment to approve or deny said payment if denied then you have to go round and round with them to get them to pay. If your injured and can not safely get around, into and out of your home then they will pay to have any modifications made to the home but they will not pay to remodel the entire home. If injured in a car accident many insurance plans will not cover the bills as that is what no fault is for and if we had no more no fault then peoples regular insurance cost would raise greatly to cover all these costs.Plus many people injured in car accidents need supervision often 24/7 due to head/brain trauma because they either are not able to make good safe decisions any longer or they are to impaired to take care of themselves, I do not think regular health insurance will cover 24/7 supervision they way No Fault does, Unless you or someone you know is injured in a car accident then you will never understand how important No Fault Insurance is.
Fri, 03/28/2014 - 8:47am
Well said Chuck, thank you. I agree this is about what kind of people (state) do we want to be. Michigan is a national leader with the finest model in America for the care, recovery, and rehabilitation of catastrophic injuries sustained in an automobile accident. The Michigan model for no fault auto insurance was designed to make patient care the priority. Some people argue that you can buy an insurance for less in many other states. What is the value of such a policy if it does not have the coverage and resources you will need if you are catastrophically injured? I submit that it has no value and therefore it is offensive for insurance companies to take citizens money and give them no value in return. If your family goes bankrupt due to medical bills because you have no coverage (no value) and then you fall economically to Medicaid where you suffer from the neglect of a lack of resources (zero coverage's provided in the Michigan model) who is benefitting from this scenario? Only the insurance companies who give you zero value for your cash. Michigan decided that our citizens deserve the finest care available, our model is proven and successful for 40 years, it is funded by drivers for drivers and it prevents bankruptcies and provides compassionate and comprehensive care for the duration of the injured person's need. What if you suffered a brain injury or a spinal cord injury in an auto accident, what would you need? want? There is no reason to change our model, least of all to satisfy a greedy grab by insurance companies. Please visit the Health Partners website and view the advocacy PSA by international best selling Author Mitch Albom, thank you.
Denise Copeland
Fri, 03/28/2014 - 11:54am
John, As the wife and caregiver for my severely disabled husband, I want to thank you for giving me hope and understanding the horrendous life of pain and suffering we already experience on top of the reality of losing what sustains us and keeps us alive, that being the life giving benefits of no fault. Dee
Margaret Shamel
Fri, 03/28/2014 - 3:17pm
I am not sure about home owners insurance or other non work place or non auto insurance policies. But, it sounds to me like all insurances could learn from the awesome model of our no fault auto insurance. But, I cannot go with the idea that just because one section of our communities don't get certain coverage no one should. Plus, we pay for coverage. That is the whole idea behind "insurance". You pay and pay and pay and hope like hell you don't ever need the protection it offers. BUT, if you do need it, it is there. That is how it is supposed to be. That is how insurance came to be an accepted part of our society. And people do have some kind of weird idea of what all is received by the claimants. Believe me, I have a great adjuster, but she doesn't just hand over money to us. We have to prove that we need what we are asking for. And you have to notarize certain claims for things such as mileage and the like. And like Denise was saying, we (or most of us anyway) have learned to do with what we have, and we go out of our way to save the insurance company money. We are not living like a king or queen let me tell you. It is not easy to fraud the insurance companies. I am sure there are some who do, but the majority of us are just trying to take care of our loved ones in the best but most cost effective way possible. I can guarantee you that it is NOT the claimants or the "no fault" part of our insurance that needs to be reformed. We have an "entity" saying that life time benefits are just too expensive and it is draining the personal protection insurance but they have yet to show us their books. What they claim has been duly challenged and proven wrong by independent sources. Yet, they still will not present their books. Who is trying to kid who in this matter? Why will they not show their books? We have a right to know. Each and every one of us in the state of Michigan has paid into this fund, and yet they feel we do not have the right to know what is going on with this money. And I would think that if it would prove THEIR case, they would have not only opened their books, but made them available to every single person who can read. So, something is definitely wrong with this picture. We in Michigan at least with our auto no fault have put our loved ones and other injured people first. Maybe other insurances need to be revamped and added to what is an example for the rest of the country. But until we are no longer being lied to, why don't we stick to our guns and keep Michigan a place where we are proud to say we live.
Denise Copeland
Fri, 03/28/2014 - 4:37pm
Thank you Margaret ....Thank You!
Fri, 03/28/2014 - 7:23pm
Ok. If Michigan is the home of the most caring, compassionate, loving, kind, and considerate people, why do we discriminate against people who with their unfortunate injuries are left without unlimited, unchallenged, lifetime medical benefits, care in the home twenty four hours per day, cooking, cleaning, car washing, car modification, home modification, massage therapy, wage loss, etc. Believe it or not, most people with totally incapacitating injuries are not involved in car accidents. And, most of them have insurance, be it homeowners, workers compensation, medical, disability, and the list goes on. To the point that we shouldn't take it away from the people who have it because others don't, I agree. Come on Michigan. Lets quit discriminating against people who are seriously injured and offer the same coverage to everyone, not just those who happen to be injured in car accidents. We can do this. Lean in. Just imagine how many people would line up and try to move the Michigan. We would be the most popular state in the country, maybe the world. Pure Michigan would be replaced with, "COME TO MICHIGAN AND COLLECT WHAT YOU DESERVE".
John Ewing
Sun, 10/22/2017 - 12:56am

Crystal clear that HB013 has been tailored specifically for the insurance industry in terms of who benefits most, while tailoring the marketing message that it's main intent is savings for the end user of the insurance. Truth is, the attempted price fixing for 5 years will never fly - no in the Senate, no in courts when challenged even if it did pass senate. And that might well be the intent.....promised guaranteed savings, strip the price fixing aspect, and then insurers will pass on some but not all the cost savings to end users. And whatever the savings in insurance costs will simply be shifted elsewhere. I really don't understand why people are, to some degree, falling for the scam. Is it not crystal clear that the whole system is failed, and that full reform is needed ? How hard is it to copy a state that does it better ?