D-Insurance Auto Plan Announced: The Bad and the Ugly

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D-Insurance Auto Plan: The Bad and the Ugly

Detroit Mayor Mike Duggan’s so-called “D-Insurance” plan was unveiled yesterday in its latest form and presented to the state Senate Insurance Committee. It’s a doozy. Although the mayor’s heart is in the right place, and auto insurance premiums are much too high for Detroit residents, this latest plan solves nothing, effectively ends the no-fault system as we know it, and instead creates a financial windfall for national insurance carriers.

The plan passed the Senate committee by a 5-3 vote. An amendment to the bill extended the eligibility of the Plan to any city in Michigan that can provide that least 35% of its residents are driving around uninsured. So this bill does not just encompass Detroit, it will include many communities throughout the state.

Currently, the Michigan no-fault law allows for unlimited medical benefits for individuals injured in a car accident. The D-Insurance plan ends that and instead replaces it with a $25,000 medical benefit. The Plan does provide for up to $250,000 in coverage for emergency room charges and treatment for “critical care” immediately following a motor vehicle accident, but once the patient is stabilized, that coverage is not available.

So what does this mean? It means once you are stabilized following a car accident, you are stuck with the minimal $25,000 medical policy. If you require surgery and other acute care good luck because that $25,000 coverage will never be enough. Instead, you will be forced to pay for these medical services through your own health insurance – insurance that many people don’t have.
For those with Medicaid it will be difficult to get approval for continued medical treatment. Also for Medicaid and Medicare patients have fun finding a doctor willing to treat you in the first place.

In addition, and this is very pernicious, at the end of the proposal is a section that allows insurance companies to create their own “limited provider network.” This means instead of having a choice of doctors – as allowed under the current system – the insurance company chooses which doctors you may see. And for anybody who has been through the worker’s compensation system and been to a Concentra understands, that doctor is not looking out for you – it’s looking out for the insurance company so that doctor can get more work in the future.

Even worse, the injured person will require pre-authorization from the insurance carrier to receive medical treatment in the first place. To obtain pre-authorization the insurance company must agree the treatment is “medically necessary.” So in effect the insurance company becomes the judge and jury for medical treatment following the car accident.

So what is this Plan?

1. It’s a transfer tax. This plan completely eliminates the no-fault system and transfers the payment of medical expenses for car accidents from car carriers to health insurance carriers and taxpayers.

2. It eliminated choice. It turns the current medical system upside down. Instead of having patient-driven care, it only provides care in a manner and scope the insurance company is willing to pay for. You want to see your own doctor? Too bad, you have to see their doctor. You want physical therapy? Too bad, it hasn’t been pre-authorized.

3. It is a financial death knell to many medical providers. Contrary to popular belief, the profit margins for most medical providers are very thin. In fact they lose money on Medicaid and Medicare patients, and make virtually nothing on other health insurance plans. Eliminating no-fault will put many rehabilitation centers, brain injury centers and other hard-working doctors, nurses and health care workers out of business.

Further, it will create an enormous financial burden on hospitals throughout Michigan. The CEO of Covenant Hospital in Saginaw, Michigan has already stated that the elimination of the no-fault system would be catastrophic for his hospital group.

And what do Detroit residents and other residents eligible under the plan get in return? Mayor Duggan explains that premiums could drop by a $1,000. But what good will that do? If someone who is quoted at $3,400 for insurance and that quote drops to $2,400, it is highly unlikely that person is going to just run out and purchase auto insurance.

The same people driving without insurance will continue to drive without insurance. Unless there is a massive drop in auto insurance rates, something auto insurance companies have basically said will not happen, the same problems will remain. The only thing that will change is the insurance companies will make a fortune pocketing our insurance premiums while paying substantially less in claims.