LANSING (AP) - Gov. Rick Snyder on Thursday proposed lowering the insurance bills for Michigan drivers in exchange for an end to unlimited lifetime medical coverage for people seriously injured in accidents.
Premiums would drop at least $125 a year per vehicle in the first year under the plan unveiled by the Republican governor and GOP lawmakers in Lansing.
Michigan has some of the highest auto insurance rates in the U.S. It’s the only state where motorists pay $175 per car per year to a fund covering catastrophic injuries for life, and the assessment rises to $186 this summer.
Snyder proposed capping personal injury protection at a mandatory $1 million, which he said is still 20 times higher than in every other state. All current accident victims covered by the Michigan Catastrophic Claims Associated would continue to get unlimited lifetime benefits, while care for new seriously injured motorists would stop at $1 million.
Those whose care is above $1 million could be covered by Medicaid or their own health insurance, or they could sue, Snyder said. He argued that 99.5 percent of accident victims fall below $1 million in medical expenses.
“Michigan’s too expensive for auto insurance,” said Snyder, who is hoping a $250 yearly savings for the average two-car household will entice legislators and the public into his corner.
Drivers also would be charged $25 a year to help fund Medicaid because a 1 percent tax on health insurance claims – paid by insurers or HMOs – is not generating as much as anticipated.
The insurance lobby and other critics say Michigan’s unique requirement for unlimited medical coverage is too expensive and costs are skyrocketing as no one anticipated they would when the state no-fault law was approved 40 years ago. Hospitals, patient advocates and others say it should stay intact, and noted that the bill would not guarantee lower rates after year one.
“Without the protections in the current no-fault law, families will be left to handle the expenses for a lifetime of treatment for traumatic brain injuries and paralysis, the costs of which will far exceed the $1 million cap in benefits being proposed,” said House Minority Leader Tim Greimel, D-Auburn Hills.
Snyder also called for the creation of an insurance fraud-prevention fund and for no longer letting hospitals and health providers charge insurance companies more for auto-related injuries to make up for lower payments from Medicare, Medicaid and private plans. Details on how that would work were not released, and the bill is expected to be introduced in the House as early as next week.
While insurance agents were on hand in the governor’s Capitol office to throw their support behind his plan, representatives from the insurance companies notably were not in attendance. They want a specific fee schedule set in law so medical providers cannot charge them significantly more than other types of insurance payers.
Recent attempts to change Michigan’s auto insurance law have stalled in the Republican-controlled Legislature. Snyder made the issue a priority in his January State of the State address, giving hope to proponents of changing the system.
“Michigan, when it comes to benefits, we are No. 1 in the country. If this bill passes, we will drop all the way to No. 1. Going from unlimited to a $1 million in coverage is still 20 times higher than any other states in this country,” said House Insurance Chairman Pete Lund, a Republican from Macomb County’s Shelby Township.
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