Michigan No-Fault Reform - Legislature Can Do Better

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Michigan No-Fault Reform – The Legislature Can Do Better

The House Insurance Committee voted out Michigan no-fault reform bills yesterday by a 9-6 vote with 2 abstentions. The vote was mostly party line, with only Republican legislators voting in favor of the insurance industry backed proposals.

As I’ve written about previously, the proposals are awful and we urge everybody to contact their legislators to vote against the bills. In return for a rate rollback of $100 per vehicle for two years – a rollback that will go away after 24 months – individuals give up a host of benefits that will have dire financial consequences for Michigan hospitals, doctors, rehabilitation centers and car accident victims.

Let’s start with what the bills do not do. They do not lower auto insurance rates in any meaningful way. The $100 reduction is a maximum decrease and is only lasts for 2 years. The bills do not provide any new benefits to policyholders. The proposals do not provide any new rights for policyholders.  The bills do not guarantee any decrease in auto insurance rates beyond 2 years.

Instead let’s look what the proposals would do if enacted. They would take away an array of benefits from policyholders and auto accident victims. They would shift the cost of paying auto accident claims from the insurance carriers themselves to taxpayers in the form of Medicare and Medicaid payments. They would put thousands of people out of work. They would fatten the already deep pockets of the insurance industry. They would deeply and profoundly effect the lives of car accident victims throughout the state.

Let’s dive deeper into why.

The substitute bill that passed out of committee is simply one giant gift to the insurance industry. First, it includes a fee schedule that is tied to 150% of the Medicare reimbursement rate. Currently, medical providers obtain much higher reimbursement rates for their services. This is an extremely low reimbursement rate that will flat out drive medical providers out of business.

This reimbursement rate is so bad that Ed Bruff, President and CEO of Saginaw’s Covenant Healthcare calls the proposed legislation the “most devastating piece of legislation that I’ve ever seen.” According to Mr. Bruff, Covenant Hospital alone would lose $11 million in revenue due to the huge reduction in reimbursement rates. Overall, it would cost $1.2 billion for healthcare providers across the state.

This is a huge problem. The healthcare industry is the largest employer in Michigan. In many areas throughout the state, it’s not even close. The enormous loss of revenue will cost the state thousands of jobs, many of them full-time positions that include health care and other great benefits. Everybody from doctors to medical assistants, nurses to lab technicians will be affected.

The only beneficiary will be to the insurance industry, who will realize incredible profits from this legislation if enacted.

The proposals also include a $15 per cap on attendant care. Attendant care is personal care required by an individual who is serious injured in a car or truck accident. Currently, individuals providing this care are entitled to receive a reasonable and customary reimbursement rate for their work. For those providing highly skilled care to the catastrophically injured, the amount of payment is much higher than the $15 per hour cap.

In addition, attendant care is cumulative capped at 24 hours per day, disqualifying second care providers from obtaining compensation by auto insurance companies for the work they perform on catastrophically injured patients. This requirement, along with the hourly cap, will cause many families to hire costly commercial nursing care, which is significantly more expensive than care provided by family members.

The proposals also include a “Fraud Authority” that is completely controlled by the insurance industry. As you can imagine, this Authority is mandated to only investigate fraud committed against an insurance company, not fraud committed by an insurance company. The bills do not authorize the Fraud Authority to investigate the conduct of insurance companies and do not include any remedies for individuals to obtain compensation against an insurance company when it commits fraud.

The bills that passed out of the House Committee now may go to a full floor vote. This is the last line of defense. If passed by the Republican controlled state house, it is expected these terrible bills will be signed into law by Governor Snyder.

These proposals must be rejected. The state legislature can do better. The citizens of this state demand as much. The Lee Steinberg Law Firm, P.C. urge everyone to contact their state representative and tell them to vote no on these horrible proposals.