Editorial

Auto insurance medical benefit cap shifts monster burden to taxpayers

April 19, 2013
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Gov. Rick Snyder in January’s State of the State called again for insurance regulation reform action. Given that Michigan has more insurance regulation on the books than almost any other state, that would seem a welcome review for effiencies and bureaucratic untangling. In the category of automotive insurance and its cost to Michigan drivers and businesses, one must also surely cite Michigan’s degraded roadways and bridges as a driver of such costs.

If Snyder is serious about reforms to reduce costs, one could expect a thorough review of regulations and a commitment to fund road and bridge repairs. Snyder instead has given focus to a single issue: elimination of the unlimited lifetime medical coverage for seriously injured individuals, an amount now paid by all drivers/per vehicle into an insurance fund for such payment.

The 1970s “no-fault” reform made the provision in exchange for an individual’s right to sue at-fault drivers and reduce litigation, especially for catastrophically injured individuals. Snyder is proposing a $1 million cap for injuries. He also has suggested that individuals far exceeding the capped medical care costs (which is as sure as a one-month hospital bill) could sue. Such suits then also could be brought against the state for injuries incurred as a result of neglected roadways.

The fact that double-digit health care cost increases and resulting higher benefit costs have created a pool of uninsured is important to consider. Health care cost increases have reached almost 20 percent of GDP. The lifetime care of a catastrophically injured individual certainly has not decreased. The current system is by far preferred, and so, too, is the work to reduce the number of regulations burdening insurance companies and adding to Michigan consumer costs.

It is otherwise a fool’s game. Hope Network, Mary Free Bed Rehabilitation Hospital and health care providers, in general, oppose such a serious erosion of care. Mary Free Bed CEO Kent Riddle last fall wrote a guest opinion for the Business Journal, citing, “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.” Riddle also noted that current regulations allow injured drivers to return home, make appropriate modifications and receive ongoing outpatient therapy programs. “The new system will send some catastrophically injured drivers without proper coverage into nursing homes because families will not be able to afford either at-home modifications needed or the attendant care while they are at work — again at taxpayer expense,” Riddle wrote.

Snyder’s accounting does not include such costs. The idea is as senseless as revoking Michigan’s motorcycle helmet law. Those who survive an accident with injuries come home to roost on the public dollar for their medical care. The proposal suggests such a cap could save Michigan motorists some policy costs for the first year, but the cost of medical burden is only shifted back onto the taxpayers — at a far greater cost than any one-year savings.

The governor’s approach to insurance industry “savings” is lazy. The accounting of such a suggestion is more than faulty — it’s a joke.

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