May 21, 2019: Michigan inches toward no-fault deal, as Whitmer remarks add to optimism
May 16, 2019: Republicans and Whitmer move closer to no-fault auto insurance deal
May 14, 2019: Gov. Whitmer, Republicans see path to deal on Michigan auto insurance reform
Update: Michigan governor and Republicans at impasse on auto insurance reform bills
House Republicans passed legislation early Thursday morning to reform Michigan’s no-fault auto insurance system by letting drivers choose to buy different levels of medical benefits.
The 82-page bill, adopted by a 61 to 49 vote, included several elements favored by Democrats that were not part of a separate reform package passed by the GOP-led Senate on Tuesday. Democratic Gov. Gretchen Whitmer had vowed to veto the Senate bill if more consumer protections were not added. It was not immediately clear if she would look more favorably upon the House version.
The House passed its reform bill just after 2 a.m. Thursday. It was first unveiled by Republicans the previous day with no committee hearings or public testimony. House Speaker Lee Chatfield, R-Levering, told reporters the bill had moved quickly because “the votes were there.”
Related Michigan auto insurance stories:
- Michigan Republicans say car insurance reforms would slash premiums
- How Michigan’s auto insurance premiums became the nation’s highest
- Detroit isn’t alone. Car insurance sky-high throughout Michigan, data show
- The real state of no-fault auto insurance: Reform within reach for Michigan
- Michigan Republicans’ 2019 to do’s: roads and auto insurance
All 58 Republicans supported the House bill, joined by three Democrats: Reps. Sara Cambensy, of Marquette; Karen Whitsett, of Detroit; and Leslie Love, of Detroit.
House Republicans said their plan would save Michigan drivers at least $120 to $1,200 a year, depending on the level of medical coverage they choose.
The House adopted two Democratic-backed bill amendments, offered by Love and Whitsett from the floor, which would:
- Require state insurance regulators to identify non-driving factors used to determine insurance rates as part of a study Whitmer ordered last month, and then prohibit auto insurers from using them, and
- Require insurers to reduce premiums on personal injury insurance.
Yet several House Democrats said they still aren’t confident the bill, even with the amendments, guarantee lower rates in the long term, nor prevent insurers from considering non-driving factors in setting rates, a practice they contend amounts to redlining. Democrats also object to the speedy process that culminated in the Thursday vote at the end of a marathon session that had begun the previous day.
The competing Republican House and Senate bills must be reconciled between the two chambers, and may reach a final vote on no-fault reform as soon as next week. If passed, it would then go to Whitmer.
Chatfield, who had made auto insurance reform a top priority, told reporters after the vote he has not yet had conversations with the governor about the language adopted Thursday morning.
But changes to the bill were made with an eye toward gaining Whitmer’s — and Democratic lawmakers’ — support. Chatfield noted on the House floor that several provisions added to the bill, from guaranteed lower rates to the prohibition of non-driving factors such as ZIP codes and credit scores in setting premiums, had come from Democrats.
“We truly felt like we had reached a point where we had delivered on some of the hallmark issues they had requested,” he told reporters after Thursday’s vote.
“There was a real effort to find consensus to ensure this was done in a bipartisan way,” he said. “The last issue that was discussed was the prohibition on insurance companies using non-driving factors for determining rates. And that was a good-faith effort made by House Republicans to bring on our Democratic counterparts. I look forward to continuing those conversations to find out exactly what is needed.”
But House Democratic Leader Christine Greig, D-Farmington Hills, criticized the way Republicans unveiled the legislation. She told reporters after the vote that Chatfield had broken a promise he’d made to work bipartisanly through a special committee that had been formed earlier in the legislative session to tackle the no-fault issue.
Greig pointed to, for instance, the proposed coverage options in the House bill, which “we never even got to that point where we got to be in a room and talk about that,” she said. “There was never a bill before the committee.”
Rep. Donna Lasinski, D-Scio Township, minority vice chairwoman of the House special no-fault committee, said on the House floor the panel had just started to come together for bipartisan policy discussions right before the bill sped to a vote.
“We don’t need rushed legislation,” Lasinski said, shortly before a Democratic-sponsored amendment failed. “We’re doing this for no good reason — just plain old politics. We don’t need to get this done tonight. We need to get this done right.”
While the House bill required cuts to premiums, Democrats said they would have gone further. Most House Democrats supported a plan that would have required a 25 percent cut to a driver’s total car insurance bill for five years, and limiting future rate hikes to the rate of inflation, Greig said.
Republicans pushed back against Democratic complaints.
The House special no-fault committee has taken testimony for months from every group that has a stake in the system, said Rep. Jason Wentworth, R-Clare, on the House floor Thursday morning. The group received thousands of public comments, he said.
“What we came up with lowers our insurance rates for Michigan drivers, in some cases by thousands of dollars, and it strengthens consumer protections,” Wentworth said. “We must put aside political differences, put a stop to partisan talking points, and pass this reform to make a difference for Michigan drivers.”
Nevertheless, Thursday’s vote marks a major advance in an impasse that has stalled progress on state no-fault reform for years. Republicans in the House and Senate, who retained majority in November’s election, said reforming Michigan’s no-fault system to lower the cost of car insurance was among their top priorities this term.
Previous legislative attempts have fallen short of the necessary votes for passage amid disputes about how much money medical providers can charge, what factors insurers considered in setting rates, and how much medical coverage drivers should be forced to buy.
Groups that lobby on behalf of auto insurers, health care providers and trial attorneys — all of whom have significant stakes in the outcome of any reform legislation — along with legislators from both parties, have disagreed on previous legislation.
For better or worse, the bill approved Thursday by the House managed to irritate groups representing both insurance companies and hospitals in Michigan.
The House bill, like the Senate version, would give drivers choice in how much personal injury coverage they can buy. Michigan’s rates are the highest in the country, according to insurance search engine TheZebra.com. That’s in large part because Michigan is the only state to require all drivers to buy unlimited medical coverage, known as personal injury protection, or PIP.
The House bill would keep the requirement that auto insurers offer unlimited coverage. But it also offers drivers more limited coverage tiers of $500,000; $250,000; and $50,000, with an extra $200,000 for hospital treatment. It also would allow drivers to opt out of buying personal injury coverage on their policies if they have separate public or private health insurance, including Medicare and Medicaid.
The Senate version also offers tiers, but lacked a $500,000 coverage option. The Senate bill also does not require insurers to offer unlimited coverage, but instead merely allows them to do so.
The amendment offered by Love, and approved by the full House, would guarantee drivers lower PIP premiums for five years — ranging from paying no PIP premiums if they opt out, to a 10 percent cut for drivers who elect to keep unlimited coverage.
That, too, differs from the Senate bill, which does not specifically require insurers to provide reduced rates (though Senate Republicans said Tuesday lower rates would be the inevitable result), which was one reason Senate Democrats and Whitmer voiced opposition to that bill.
Once the five-year guaranteed PIP rate reduction ends, the House measure would require the Michigan Department of Insurance and Financial Services to approve auto insurers’ proposed rate increases before they take effect. Currently, state regulators review auto insurance rates after they’re enacted, rather than before, a process known as file-and-use.
That addition apparently did not sit well with an insurance industry group.
“We have serious concerns with the arbitrary rate and regulatory mandates that will be counterproductive to the goal of saving drivers money,” the Insurance Alliance of Michigan, which represents auto insurers, said in a statement after the House vote. The group added that it supports provisions to cap medical costs and offer drivers coverage choices.
PIP coverage is the most expensive part of an auto insurance policy, and covers the cost of treating catastrophic injuries for life.
Currently, Michigan does not limit what hospitals and medical providers can charge for crash victims’ treatment, which means auto insurers typically pay more for services than health insurers do. As a result of rising medical costs and the lack of a cap, Michigan’s costs are, for instance, five times higher than New Jersey’s, the next closest state.
The House, like the Senate, would reimburse medical providers for treatment at set rates based on Michigan’s workers’ compensation system.
“This bill puts a fee schedule on medical procedures and makes the health care providers accountable (by setting) reasonable fees for medical procedures,” Rep. Beau LaFave, R-Iron Mountain, said on the House floor. “Auto no-fault insurance has no fee schedule, and that is part of the reason it costs so much money to get insurance in the state of Michigan.”
The Michigan Health & Hospital Association voiced its distaste for the House bill, saying in a statement after the Thursday morning vote “it’s a sad day in Lansing when legislators are celebrating jamming through a bill on a serious and complex issue under the cover of darkness.”