No fault insurance change isnt a no brainer

October 2, 2011
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This week, the Michigan legislature takes up the issue of no-fault auto insurance, but should do so cautiously — or their alternative might create some financial headaches for our cash-strapped state.

It helps to take a look at the background to understand the present-day situation. The No-Fault Act went into effect in 1973, establishing a fund in order to pay long-term or lifetime medical benefits for accident victims without regard to who caused the accident. In return, Michigan drivers gave up the right to sue at-fault drivers in most cases. The idea was to reduce litigation while providing needed medical benefits for people who are catastrophically injured as the result of a vehicle accident.

Introduced in September, House Bill 4936 is seeking to eliminate our current personal injury protection, or PIP, by allowing drivers to purchase capped medical benefits as low as $250,000 in exchange for reduced premiums. The passing of this legislation would be a terrible idea for Michigan drivers that could have disastrous economic results for our state. Consider:

  • Under current PIP coverage, injured drivers receive the necessary medical care they need to recover — first at acute care hospitals, and then at rehabilitation hospitals such as Mary Free Bed. We are the experts in rehabilitative care with our highly individualized rehab programs; teams of trained, caring therapists and physicians and nurses; and state-of-the-art protocols and equipment.

  • Under the proposed lower caps, a driver with a brain injury, spinal cord injury or other traumatic medical condition will reach his or her limit within days at an acute care hospital — then be shifted to our state’s already overburdened Medicaid system for continued hospital care, rehabilitation and then lifelong care.

  • Current PIP benefits allow injured drivers to return to homes that have been modified to accommodate wheelchairs or other medically necessary devices. They also provide for ongoing outpatient therapy programs through Mary Free Bed and other post acute providers, as well as in-home medical attendants. The new system will send some catastrophically injured drivers without proper coverage into nursing homes because families will not be able to afford either the home modifications needed or the attendant care while they are at work — again, at taxpayer expense.

  • Current personal insurance protection averages about 40 cents per day per insured vehicle, or less than 30 percent of the cost of the total premium.

  • Under our current no-fault insurance system, the quality of life is so much greater for accident victims and their families — and for only 40 cents a day. This is a small insurance cost for the tremendous benefit it provides.

Studies have shown that drivers will choose the lowest cap, which will limit their medical benefits. After all, who thinks they are going to be seriously injured in a car crash? But scrapping a system that already works well will do nothing but increase costs for taxpayers, eliminate jobs and jeopardize the ability of injured drivers to maximize their recovery potential and return to being productive citizens.

Kent Riddle is CEO of Mary Free Bed Rehabilitation Hospital.

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