Government and Health Care

Health care rallies against cap in auto no-fault law

Hope Network hosts public meeting in opposition to proposed $50,000 cap.

April 12, 2013
| By Pete Daly |
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Hope Network has scheduled an open “town hall” meeting in Grand Rapids on Monday to air what it calls “consequences of the pending auto no-fault legislation.”

Michigan Senate Bill 251 would cap injury benefits at $50,000 for accident victims, under the state’s no-fault auto insurance law. Michigan no-fault is unique in the nation in that it provides unlimited lifetime coverage for medical expenses resulting from auto accidents.

The news release from Hope Network states that “research shows this cap would shift millions onto taxpayers. The bill also requires fee schedules to be applied to auto injury cases, which would cost Michigan hospitals systems an average of $10 million annually. While these reforms will provide cost savings for insurance companies, the bill does nothing to require a reduction in costs for consumers.”

Terry Mulvihill, director of external affairs at Hope Network, said $50,000 for medical expenses is not going to last an individual long. “That $50,000 limit is nowhere near what’s necessary” for long-term care and rehab, he added.

Hope Network operates five post acute care rehab centers around Michigan, and Mulvihill noted “we work with a lot of people who have traumatic brain injuries from car accidents.”

The town hall meeting at the Hope Network Education Center, 775 36th St. SE, will feature leaders of the Coalition Protecting Auto No-Fault, including President John Cornack and George Sinas, CPAN general counsel. Also speaking will be Mulvihill; Dr. Greg Golladay, an orthopaedic trauma surgeon from Spectrum Health; Laura Appel, Michigan Health and Hospital Association; and others.

CPAN was formed in 2003 by health care, labor and consumer organizations to preserve Michigan’s no-fault auto insurance system as originally established in 1972.

Supporters of unlimited medical coverage under Michigan no-fault have squared off against the Michigan Catastrophic Claims Association, a private, nonprofit association created by state law in 1978. The MCCA reimburses auto no-fault insurance companies for catastrophic medical claims (called Personal Injury Protection, or PIP) it pays beyond $530,000.

All auto insurance companies in Michigan are assessed to cover the catastrophic payments and they, in turn, pass the cost on to their customers.

In late March, the association announced the assessment would increase July 1 by $11 per vehicle, or 6 percent. The assessment to consumers will rise to $186 per insured vehicle.

MCCA said $156.44 of the per-vehicle assessment will cover anticipated new claims; $29.19 will address a $2 billion estimated deficit relating to existing claims; and 37 cents goes to administrative expenses.

MCCA said it paid out $947 million in 2012 for claims resulting from catastrophic injuries, the majority being closed-head and spinal cord injuries, multiple fractures, and back and neck injuries.

The association said it has faced steadily climbing costs associated with providing unlimited lifetime catastrophic claim insurance, and it noted in its March 27 news release that Michigan is the only state requiring drivers to pay for unlimited benefits. The state with the next highest mandatory benefit level is New York, which requires $50,000 worth of coverage.

Since 1979, almost 30,000 claims have been reported to MCCA, estimated to cost the association $83 billion through the life of those injured individuals. The association says payments to full-time family members or agencies taking care of the injured are approximately 60 percent of the claim payments, and the MCCA news release states that “medical care costs continue to rise more rapidly than general inflation.”

SB 251 was introduced by Senators Virgil Smith, D-Detroit, and Joe Hune, R-Hamburg.

“Why should everyone be forced to pay for health care when they are in their car, especially those consumers who already have health care through work, Medicare, or Medicaid,” Smith wrote on his Senate website. “The Affordable Care Act will take effect soon; therefore more Americans than ever will have access to health care. Why do we mandate that, by purchasing auto insurance, we duplicate health insurance?”

Michigan House Insurance Committee Chairman Pete Lund, R-Shelby Township, responded to the MCCA March rate increase by stating that auto insurance is too high in Michigan — “and now drivers are facing another set of rate-hikes due to the outdated statutory insurance mandate in our state.

“The MCCA can’t remain solvent without constant rate-hikes, which add to the burden on Michigan families, so it is time for the Legislature to step in with reforms that create realistic solutions to the problem of high rates of insurance coverage,” Lund said. “There are some people that are standing in the way of real reform, and it is time for them to step aside. Michigan taxpayers deserve a sensible approach to insurance coverage — one that focuses on people, not numbers.”

The CPAN and the Brain Injury Association of Michigan do not agree with Lund. Cornack, who is the president of the Eisenhower Center for treatment of traumatic brain injuries in Ann Arbor in addition to serving as president of CPAN, said MCCA keeps adding to its rates “because they keep telling everyone there’s a deficit.” He said MCCA “made close to $500 million” last year after rates were raised following claims of a deficit.

“You can’t keep saying you’re having a deficit when you keep making more money,” he said.

The MCCA does not reveal its finances, however, so CPAN and the Brain Injury Association sued last year, claiming that the PIP assessments are actually public funds, and the internal finances of MCCA should be open to public scrutiny. An Ingham County judge agreed, and ruled in December that MCCA must open its books. However, that ruling is now under appeal with further court action due in May.

“They’re raising the rate, blaming it on (the cost of) health care, and they get away with it because everyone (in the news media) writes as though that’s the truth,” said Cornack.

“We’re saying that is not even close to the truth,” reiterating that “transparency” will resolve the debate.

He said the Michigan no-fault insurance law “works as it was planned to work.” With the unlimited PIP coverage, he said, it keeps many potential law suits out of court, “and we take care of people the right way.”

He said the no-fault system “is not broken. It’s probably the perfect model for health care” coverage related to auto accidents.

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