Opinion | Michigan needs auto insurance reform. But don’t scrap No-Fault

Phil Weaver is president of Hope Network, which advocates for people who face physical, mental and social barriers in Michigan.

May 24, 2019: Bipartisan Michigan auto insurance deal reached between Whitmer, GOP

This should be met with no surprise: A recent statewide poll showed a large majority of Michigan citizens reject any plan to limit or eliminate medical benefits for auto accident victims.

When a friend or loved one is injured in an auto accident, the system provides the care that is needed, without delay, and for as long as it is needed. At Hope Network, we see the benefits of this system every day as people who were catastrophically injured work back toward independence.

Michigan’s Auto No-Fault system is a fundamentally good system. But we would all appreciate lower insurance premiums. There are many ideas on how to bring down rates, but not all of the ideas protect the policyholders. Some let the insurance companies off the hook while not guaranteeing any premium reductions.

The most common solution like this is called “PIP Choice,” which refers to limited Personal Injury Protection coverage and really just means insurance companies do not cover the cost of care for catastrophic injuries. This plan does not come with any guarantee of premium reductions. In fact, according to the National Association of Insurance Commissioners, the states with the highest average premiums, when you exclude the Comprehensive and Collision coverage, all have a form of this PIP choice cost solution. They are Florida, New Jersey, and New York.  

Yet Michigan is fifth in the nation on this same list, so we need real solutions—like passing an anti-fraud bill. When State Farm testified before the House Insurance Committee on March 20, 2016, the statistic was that fraud was 16 percent to 18 percent of all claims. Reducing this number would benefit all of us and protect our system as a whole. State Farm representatives agreed in their testimony that creating a better Fraud Authority should bring down premiums in Michigan. In fact, there is no dispute on any side of this debate that we need better anti-fraud initiative, yet the legislature has not passed any reforms in this area despite being provided legislative language.

Another proposal put forward already in legislative language is the establishment of a reasonable fee schedule for healthcare providers who accept this funding. A fee schedule would have multiple advantages over our current system by ending disputes on what a provider should be paid, as well as stopping providers who may be overcharging. Defined reimbursement rates will also reduce the number of lawsuits currently being filed related to provider charges. All of these benefits will positively impact premiums for drivers.  

Proposals have also been crafted to reduce premiums for senior citizens. The language provides an option to buy a wrap-around policy for those who have Medicare. This change would eliminate the cost of the duplicate coverage in their auto policy, while protecting the insured with the benefits not covered under Medicare.  

Finally, we need to address the non-driving rating factors that are used to price people out of the market. All drivers should be offered fair premiums adjusted on actual driving risk factors. In Michigan, many good drivers are being priced out of our system based on their home ownership status, job type, gender, and even status as a widow. Additionally, by having “good” credit instead of “excellent” credit, your annual premium in Michigan can increase by over $400 according to Consumer Reports. If pricing was exclusively based on driving risk, rates would go down for us all.  

There is a clear path forward to reduce the auto insurance premiums in Michigan without sacrificing the care that is needed for those injured and left with the potential for lifetime disabilities. If we work together and think smart, there can be a win-win.

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Kevin Grand
Mon, 04/08/2019 - 7:06am

The MCCA should open its books if it wants to remain an entity.

"Just 'cuz we said so", is no justification for it constant steady stream of price hikes over the years.

Mon, 04/08/2019 - 8:42am

Getting control of medical charges would go a long way to improving insurance rates. When the amount the hospital charges depends on which or no insurance covers the patient, the system is open to abuse. If your automobile insurance covers medical costs, that automobile insurance company will typically be charged more than if some other medical insurance company is paying the bill. In simple terms, an aspirin and the delivery of such should cost the same whether an auto policy, a medical policy, or no policy is covering the patient.

Sun, 04/14/2019 - 6:12pm

You are right on with your hospital evaluation. Hospitals love the "first dollar coverage" with no discounts that the no-fault system pays. Non negotiated hospital charges are a big part of the problem with our high insurance rates. Pretty soon there could only be 3-4 hospital systems in Michigan and then the prices will rally escalate. Have you checked what hospital officials and employed docs are now paid in Michigan?

Mon, 04/08/2019 - 9:30am

Another comment from being witness to an emergency room visit. The doctors at an emergency room, or for that matter all doctors working in a hospital are not employees of the hospital but rather employees of a practice or self employed. As such, they may or may not be in-network for the patients insurance company. The patient in an emergency room may not be able to pick and choose who works on him to stay in-network. It would be far better to have doctors working in a hospital be employees of that hospital to insure that the patient is given the lowest rate for a procedure.

Consultation is another area for abuse. The patient comes into the emergency room and a doctor or doctors work on that patient. Then there are other doctors who charge for consultation causing the bill to skyrocket. Again, make the doctors employees of the hospital.

I have seen follow up visits charged 3 different rates depending on which doctor is doing the follow up. One named doctor will charge a higher rate, another named doctor will charge a middle rate, and the third named doctor will charge the lower rate.

The bottom line to all this abuse is insurance company negotiations. We need one charge for one specific procedure and need to eliminate all the piling on when a helpless patient ends up in the hospital.

Mon, 04/08/2019 - 9:34am

I disagree with Mr. Weaver's assessment that Michigan’s Auto No-Fault system is a fundamentally good system. There is nothing fundamentally good about a system that has no ceiling on payouts, which has the highest rates in the nation, and doesn't sufficiently regulate the insurance and medical systems that are profiting from it. Lawyers, insurance companies (particularly the MCCA), and medical facilities are the only ones who want to keep the status quo.
There does need to be a comprehensive overhaul of the current auto insurance ripoff that is currently in place in Michigan and it needs to be a top priority of Gov. Whitmer. All parties need to be brought to the table and work out a system where everyone is held accountable and doesn't gouge drivers with good records and multiple vehicles.

Mon, 04/08/2019 - 10:58am

I agree.

John Putt
Tue, 04/09/2019 - 7:46am

Well said.

Tue, 04/09/2019 - 4:01pm

Insurance companies DO NOT want the status quo. They are the ones pushing for the "reforms" so that costs can be shifted either to the injured auto accident victim's health insurance or Medicaid. And then watch their already record-high profits soar...

Chuck Fellows
Mon, 04/08/2019 - 10:29am

No fault is not the problem. Weak law and limited over site are the problems. As many other states do our legislature should set fee schedules for medical, professional service, pharmaceutical, medical devices and attendant care; change "file in use" to "prior review"; set rates based upon driving record only; make insurers subject to anti trust and FOIA. Those lawful actions will reduce the cost to insurance companies and may interest additional insurers in the Michigan market. Only question is, will the legislature insure the cost reductions flow to policy holders? Contact your legislator, www.legislature.mi.gov.

Al Churchill
Mon, 04/08/2019 - 10:36am

Pardon me for being skeptical of most anything called reform. I was around when no-fault came into existence and remember being told that, because lawyers were taken out of the picture, rates would decrease dramatically. Never happened.
Before anything else is done, the cost of health care in this country needs to needs to be addressed. This country pays twice as much for health care per capita than any other developed country in the world. and, in some instances, the outcomes are not as good.
A member of my family, recently, had to go to the emergency room at a local hospital for stomach problems. She was there for roughly four hours, mostly waiting for test results. A doctor was with her for, at most, twenty minutes. The fact that I have top notch medical insurance notwithstanding, the bill was $6000.00. Somebody in the medical profession is making a ton of undeserved money and few are paying attention.

James Roberts
Mon, 04/08/2019 - 12:13pm

Mr Churchill is right. A few years ago I was in Detroit Receiving for a minor auto incident for about four hours. In that time i received three different Lawyers cards as referrals from various hospital staff,no doctors of course, but still unethical and probably illegal, or should be. I did not pursue any legal action, but it should be pretty clear that all those TV commercials are being paid for by a high profit business model: since when did an auto accident become the equivalent of winning the lottery, oh yeah since No-Fault.

Mon, 04/08/2019 - 1:24pm

Someone explain this to me...
Individual doesnt drive. Hasnt had a car in quite some time because either they afford it, or its just not running. Individual decides to get a vehicle at a later date and prices are ridiculous or they cant get coverage because they havent had insurance in 6 months. But hey, let me insure a "vin" in storage so that these companies still make money AND I can get coverage at a later date. These companies are all crooks. This state is ripping all of us off. What happened to the roads being fixed? Seriously Michigan pull it together.

Ann Farnell
Mon, 04/08/2019 - 2:07pm

Kevin, there you go again writing something I can
agree with! How is it that MCAA has no oversight? And can get away with closed books. Isn't it a public entity? Governor Whitner, we need transparency!

Mon, 04/08/2019 - 3:06pm

I was insured through a commercial insurance policy for over 20 years with the same company for my automobiles. I recently sold my business so I asked for a quote from the agency who had my commercial business. They refused to insure me because I didn’t have a policy in my name for over 20 years ! Tell me auto insurance in Michigan ain’t broke !

Mon, 04/08/2019 - 3:06pm

I was insured through a commercial insurance policy for over 20 years with the same company for my automobiles. I recently sold my business so I asked for a quote from the agency who had my commercial business. They refused to insure me because I didn’t have a policy in my name for over 20 years ! Tell me auto insurance in Michigan ain’t broke !

Mon, 04/08/2019 - 3:06pm

I was insured through a commercial insurance policy for over 20 years with the same company for my automobiles. I recently sold my business so I asked for a quote from the agency who had my commercial business. They refused to insure me because I didn’t have a policy in my name for over 20 years ! Tell me auto insurance in Michigan ain’t broke !

Jeff Ferrari
Mon, 04/08/2019 - 3:56pm

No fault needs to go BYE BYE PERIOD !!!! Colorado got rid of theirs in 2008 and rates went down an average of 35 % get it !!! That's what WE need! Pretty simple !!!

Jim Watkins
Mon, 04/08/2019 - 6:09pm

Perhaps the best column on this issue I have ever read.

George Sinnott
Mon, 04/08/2019 - 11:27pm

We have several problems with the MCAA. The fund currently has over $20 Billion, yes BILLON dollars. The insurance companies have just gone to the insurance commissioner and he has approved a rate increase for no-fault insurance to over $200 per year. The obvious question would be why did the insurance companies get an increase approved with this much money in the fund? It appears to me that the insurance companies are getting anything that they request from the State Insurance Commissioner. We need transparency with this fund and an annual audit. I believe our Governor is on the same page on this one! I recently had a 40% increase followed 2 years later by another 20% increase for Long Term Care insurance! Needless to say, the policy was cancelled by me after paying in over $20,000. I believe we need an Insurance Commissioner that represents the people of the state rather than agreeing to every increase requested by the insurance companies. The cost of No-Fault could be brought down substantially by paying Medicare rates for services rendered rather than the hospital and doctor's top rates. Of course, any such reduction of payments would be fought by the powerful Hospital and Doctor's lobbies.

We need legislators and an insurance commissioner that represents the people of the state and brings the high cost of driving a car in Michigan under control.

pamela roth
Wed, 04/10/2019 - 8:42am

We paid off our home and our auto and have only one credit card that we pay off every month..so now at 65 and ready to retire we have zero debt.Problem is we did all that and our credit score dropped almost 35 points.The fallout was our auto insurance has now gone up.I called and tried to explain why our credit score fell that fast and no one was interested.They said they just look at a score and it is inserted into an insurance formula and out pops my premium. So now we are being penalized for not having any debt and have had no tickets or accidents in at least 15 on the tickets in over 25 for accident.Something has to change because we can not afford the almost thousand dollar premium every 6 months on a retirement salary.Michigan is pricing seniors right out of the state.

watt wingfoot
Wed, 04/10/2019 - 12:34pm

just turn on TV and see all the Ambulance chasing lawyers you all know several of them, now who pays for them and all those commercials, you and I do with our insurance premiums

Ralph K
Sun, 04/14/2019 - 5:45pm

I’m about to move to the state. I’m curious where I could find a financial report on this fund.

Richard Colony
Wed, 04/17/2019 - 5:36am

If you eliminate the use of credit rating as a factor in insurance rates, you will cause my insurance cost to go up. I have Excellent credit rating and Excellent driving record and have for many, many years. Don't mess with it, as it does represent a level of responsibility. Don't base it heavily on credit rating but combined with traffic tickets and accident experience can confirm or question a persons responsible level. If they are not consistent then the credit rating should not be weighed heavily.