Michigan has a highly-functional No Fault Law that serves as a legislative model for other states. Yet our lawmakers, in a heedless and needless rush to cut costs, are proposing changes that will harm those most in need of assistance. Shouldn’t have to say this but if it’s not broke, please, please don’t fix it.
Michigan’s No Fault Law provides for a privately funded system to provide lifetime Personal Injury Protection (PIP) by providing full injury and rehabilitation benefits to restore to them as much as possible the quality of life they enjoyed before the injury.
Because of Michigan’s No Fault Law, vehicle accident victims are entitled to benefits such as payment of medical expenses, lost wages and attendant care and other benefits, unless they were driving a car they own without insurance. Under Michigan No Fault Law, victims may seek recovery of damages by filing a first party claim, a third party claim, or a mini tort claim.
Under current No Fault Law, Michigan offers limitless medical coverage for an auto accident victim which allows payment of medical bills for all injuries, including catastrophic injuries. The Michigan Legislature has introduced two bills which seek to dilute coverage in a misguided attempt at cutting costs.
The Legislature is seeking to eliminate Michigan’s unprecedented system of granting unlimited medical coverage for auto accident victims who have suffered traumatic injuries that require long-term or lifetime care.
Pending legislation in the Michigan Senate would set minimum catastrophic coverage at $50,000. Under the proposed legislation in the Michigan House, motorists would choose and pay premiums for catastrophic coverage that would provide a medical care ceiling of $250,000, $500,000, $1 million or $5 million.
The proposed Senate Bill 292 would pull the rug from under Michigan’s most susceptible, vulnerable and sensitive citizens who have inadequate insurance coverage and are unable to financially cope with a catastrophic injury without assistance from Michigan’s No Fault Law, as presently written.
Medical bills for a catastrophic injury will add up to $50,000 in just three days of care. And the proposed House bill is an undisguised attempt to shift the costs from the state to individual motorists, which is grossly unfair and dismisses the state from its obligation to care for those citizens unable to care for themselves.
Reducing Michigan’s lifetime PIP benefit will eliminate Michigan jobs, increase costs to the taxpayers, and dismantle the Michigan Catastrophic Claims Association (MCCA). If the proposed legislation is approved, catastrophic injured victims will be forced into bankruptcy and the state Medicaid system would be forced to pay for their care. This is merely a cost shift from the insurance industry to taxpayers.
Even the House bill which provides for citizens to pay for their own medical coverage will add to the Medicaid burden because most consumers, when given the choice initially, will choose the lower $250,000 coverage because it carries a lower premium. And $250,000 will not protect a catastrophically injured person for very long.
Last year the MCCA reimbursed auto insurers for more than $800 million, which was spent on health care. With most drivers opting for minimum coverage with the lowest premium, far fewer victims will have the ability to pay for post-acute and long-term injury rehabilitation which will put thousands of Michigan jobs at risk.
A 2011 study by the Anderson Economic Group of East Lansing, MI, estimates the proposed legislative changes could result in thousands of lost jobs and millions in lost earnings, and leave about 700 people a year with severe injuries without proper treatment. The study shows the proposed No Fault changes would cost Michigan more than $209 million in economic output, result in a loss of between $71 million and $166 million in earnings, and result in a loss of between 2,556 and 5,191 jobs.
The Anderson study confirms what common sense tells us – that 75 to 90 percent of drivers would choose to purchase PIP coverage that would not cover lifetime catastrophic expenses. Medicare and Medicaid do not cover that much of catastrophic health care costs so the net impact is a major reduction in spending on health care, home care, rehabilitation and similar purchases which leads to the job losses and loss of earnings the Anderson study details. Thus the legislation proposed is like shooting yourself in the foot to save an infected toe nail.
I certainly understand Michigan is facing hard times because of the prolonged economic downturn, and that citizens rightly expect the Legislature to cut costs and come up with major savings. And Michigan No Fault should not be exempt from the cost-cutting surgeons but we need to trim away fat, not engage in blood-letting. There are reasonable changes that can be made to save money without harming those members of society most susceptible to harm. And I support that effort – as long as we keep the baby in the bathtub.