Lawmakers target nofault

October 1, 2011
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LANSING — Legislators have developed a bill to eliminate Michigan’s no-fault insurance system that provides drivers with unlimited medical coverage for auto accident victims who have suffered traumatic injuries.

Supporters of the policy change said it would allow motorists to opt out of expensive insurance that drivers can’t afford. Opponents said it could threaten the financial stability of the state’s no-fault auto insurance system and tap into the state’s Medicaid system.

The latest version, introduced recently in the House, would require drivers to select from four tiers of medical coverage starting at $250,000 and capping at $5 million. The Senate bill, introduced in September, required a minimum of $50,000 and up to $500,000. The Senate bill would create six tiers of Personal Injury Protection from which drivers would choose.

“We are the only state in the nation where motorists are required by law to purchase unlimited medical insurance. The costs are out of control, and the current system is not fiscally stable,” said Rep. Pete Lund, R-Shelby Township, who chairs the House Insurance Committee and introduced the House bill.

Now people injured in automobile accidents have the right to recover certain benefits, usually through their own insurance company, regardless of who caused the accident. Michigan is currently the only state that requires unlimited medical coverage to those who have been severely injured in an auto accident.

“In a time when people in Michigan are pinching pennies just to make ends meet, they should not be forced to purchase a one-size-fits-all insurance plan that they cannot afford and may never need,” Joe Hune, R- Hamburg Township, said in a statement. Hune is a chair of the Senate Insurance Committee. “This proposal will provide people options to choose the level of coverage to suit their needs.”

“Our main conclusion based on the findings of our report is there is no reason to modify the coverage policy right now,” said Jane Powers, vice president of Public Sector Consultants, the Lansing firm that conducted the study.

Public Sector Consultants conducted the study for the Coalition Protecting Auto No-Fault, a group that has actively opposed the auto insurance package. The coalition includes the Michigan Health & Hospital Association, the Michigan State Medical Society, the Michigan Consumer Federation and the Brain Injury Association of Michigan.

Powers said that once drivers who are injured in a catastrophic auto accident use up their medical benefits and exhaust their resources, they could eventually fall into the Medicaid system.

The study found that Michigan’s Medicaid program could spend an extra $30 million during the first year if the state Legislature approves bills to change the state’s 39-year-old no-fault automobile insurance law.

Each year, 500 Michigan drivers suffer a catastrophic auto accident that requires long-term care in a rehabilitation center. If those drivers eventually became Medicaid eligible, the long-term costs alone would total, at a minimum, $30 million in the first year, according to Powers. The bill will go to the House Insurance Committee for further consideration.

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