No-fault reform would leave crash victims vulnerable

IT COULD HAPPEN TO YOU: How you feel about no-fault auto insurance reform might depend on whether you've ever been involved in a serious accident. (Photo by Flickr user Lance McCord; used under Creative Commons license)

A few years ago I found myself sitting in the back seat of a burning Jeep, stunned and not breathing.

It was a late summer night, and my friend had taken his eyes off U.S. 31 long enough for the Grand Cherokee I was riding in with two other friends to veer off the road to hit a concrete culvert. The truck did three end-over-end front rolls like a cheerleader doing flips down a football field sideline.

Our battery was found 100 feet away. The engine block was gone. All that was left was the four of us, speckled with glass cuts, crawling from a bent-framed flambé in a field south of the Mackinac Bridge.

One thing I remember distinctly was not being able to draw a breath and the strange surprise that we had rotated fast enough to have my flip-flops vanish.

The paramedics came and we all went to the hospital, where by some unsolved physics problem, none of us were hurt more than some cuts and swollen ribs.

Mostly, I never think about that accident, though I distinctly remember spending the rest of the summer waiting tables to pay off the tab for the ambulance and emergency room visit.

Something reminded me of it last spring though, when a woman called me about her opposition to the plan to reform no-fault insurance in Michigan.

The woman’s son had crashed a car, and the 20-something son hadn’t been so fortunate. He is paralyzed and has permanent brain damage. The long-term costs for medical care had run into the millions of dollars, despite the woman quitting her job to provide care.

Michigan – luckily for her and her son – requires drivers to pay for unlimited long-term injury care through annual fee to the Michigan Catastrophic Claims Association, which begins paying out to injury claims after costs exceed $500,000.

Those payments mean higher car insurance premiums in Michigan. And a renewed debate in Lansing is questioning just how much drivers in Michigan should be paying up front for insurance and how much should be left to health insurance.

The legislation saw renewed interest from the House Insurance Committee in October, where the revised language would cap unlimited injury payments at $1 million starting Dec. 31, 2013.

State Rep. Pete Lund, R-Shelby Township, introduced the reform last April, but the bill has gotten mixed support from his party since, regardless of being a priority for the governor.

The bill would create a new fund that only kicks in after medical bills exceed $530,000 starting in 2014 and would stop at the $1 million cap. Motorcycle accident victims (helmet or sans helmet) would be capped $250,000 in additional costs and non-state residents at $50,000.

Similar legislation in the Senate, introduced by Sens. Virgil Smith, D-Detroit, and Joseph Hune, R-Hamburg Township, would cap the personal injury protection at $50,000.

Essentially, some lawmakers think the rising cost of insurance in Michigan is unsustainable.

“Michiganders have seen their auto insurance rates rise faster than any other state in the country," Gov. Rick Snyder said in a statement when the legislation was introduced. "These changes will create a policy that continues to cover accident victims far better than any other state and will create cost controls that stem the tide of rising insurance premiums while also providing immediate relief for families."

House Democrats collectively opposed Lund’s bill in the spring, including House Minority Leader Tim Greimel, who said the GOP was “more interested in giveaways to big insurance corporations than helping Michigan citizens who have life-changing injuries.”

The debate is less about politics and more about who should pick up the check for severe-injury crashes in Michigan.

Last year, drivers in Michigan paid a record high $175 for the annual No Fault insurance fee. Advocates point to the rising fee as one of the key reasons Michigan has some of the nation’s highest coverage rates.

The public affairs research nonprofit Citizens Research Council of Michigan reignited the reform debate in October with a report showing auto insurance rates are 17 percent higher than other states in Michigan and that medical costs associated with accidents are 57 percent more expensive – despite being one of 12 other states with mandatory or optional no-fault insurance.

While those figures will likely serve as fuel for a debate on how to keep auto insurance costs down, lawmakers might also want to remember voters defeated referendums in 1992 and 1994 to change no-fault insurance and take a look at the growing medical costs that would be shifted to taxpayer-funded programs like Medicare and now the Affordable Care Act for 1.3 million uninsured residents.

About $10 billion has been paid by the Michigan Catastrophic Claims Corporation on 12,836 claims in Michigan from 1981 to 2012, according to a House Fiscal Agency report. About a third – 4,349 claims – exceeded $1 million (the proposed cap) totaling about $8.1 billion, the report notes.

It doesn’t take long to figure out why insurance companies would like to shift the cost away from car insurance fee-generated payouts and onto private health coverage, or why the groups like the Michigan Health and Hospital Association vehemently oppose the reform plan.

Ramming through a cap on no-fault insurance this fall would be a mistake for drivers and passengers in Michigan. Lawmakers need to take a serious look at the people the Michigan Catastrophic Claims Association has covered and have a real debate about how to lower insurance rate while not leaving the most vulnerable people in our population without sufficient medical care.

While lawmakers might win a few votes and campaign favors with cheaper car insurance, they would be passing the buck to taxpayers who may or may not even own a car.