No-fault auto reform needed for Michigan
If you happen to occasionally observe the innumerable medical and personal-injury ads that litter the sides of our major roads or see them on TV, you can rightly assume that Michigan is very fertile ground for big-money vehicle-related claims and litigation.
Every few years, our state Legislature wrestles with cost-cutting reform for our terribly expensive no-fault auto insurance system, and the effort is eventually stopped dead in its tracks
It's become a predictable scenario, with this year being no exception.
The majority of our Lansing officials eventually buckle to pressure by legal and medical coalitions — who also tend to be generous campaign contributors. In the meantime, the price of auto insurance keeps sucking our wallets dry, and when medical centers are charging two to five times more than what most health insurers would pay, one doesn't have to be very bright to know that something is drastically wrong with the system.
Our current no-fault system is simply a sickly gravy train for the unethical and greedy, while an insufferable burden for the general motoring public.
Uncontained, unlimited medical has long been a recipe for cost excesses and abuse, or what some might call legalized fraud. Consider that the average cost of MRI and ER billings through Medicare are $484 and $125, while the average "no-fault" assessment it is $3,279 and $444, respectively.
These are just two of almost endless examples. As expected, these unwarranted costs are passed on to you, the motoring public, via higher insurance rates.
Insure.com informs us Michigan now has the highest auto rates in the nation for the second consecutive year, and has been No. 1 or No. 2 the past five years, a direct result of our unsavory unlimited medical benefits in Michigan, pure and simple — still the only state in the nation which has it. With this, it is not surprising one-fifth of Michigan motorists are now uninsured.
Effective July 1, Michigan drivers will be assessed a still astronomical Michigan Catastrophic Claims Association “tax-equivalent” fee of $150 annually per vehicle — down from $186, but way up from the initial $3 fee back in 1978. If you have multiple vehicles, simply hold your breath and do the math — for something from which the tiny minority of us will ever benefit.
The Michigan Association of Insurance Agents and auto insurers in Michigan have been actively calling for no-fault reform, along with other reputable organizations like Michigan Farm Bureau and the Michigan Chamber of Commerce, et al.
The recently proposed (but stalled) legislation to reform no-fault, SB 248, offers some cost containments and is a good first step even though it doesn't call for an abrupt end of unlimited medical. A few of SB 248's key components would be a newly reformed MCCA with open meetings, scrutiny of MCCA's books, and focus on fraud-prevention — something that deserves our unwavering support.
In conclusion, how many households or businesses among us operate with an unlimited budget, or would even support such for our schools, local, state or federal governments?
More importantly, how much longer will we, the motoring public, tolerate an unlimited-lifetime, "blank-check" funding mechanism for personal auto injury claims?
Continuing to do so is simply bad medicine for Michigan drivers. Most of all, it's a huge financial drain on all of us. While the legal and medical coalitions doggedly oppose any cost containments, fighting to preserve the lucrative status-quo, it is high time for Michiganders to cast a deaf ear to their self-serving and often deceptive pleadings.
Along with our elected lawmakers, we, the Michigan motoring public, finally need to draw a line in the sand and demand immediate and meaningful no-fault changes.
Lou Kitchenmaster is an independent insurance agency owner in the greater Greenville area.