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How to (really) save Michigan's No-Fault insurance system

Our auto No-Fault system provides better care without using public tax dollars

There are two things that are currently being lost in the political debate of whether to change Michigan’s No-Fault insurance system.

The first is that since Michigan No-Fault was created, with one simple sentence 40 years ago, it has provided the best and most comprehensive system of health care coverage that exists in the United States. Michigan No-Fault has created a system of health care that’s more comprehensive than Blue Cross Blue Shield, Medicare, Medicaid, workers’ comp and anything else. And this remarkable one sentence created our No-Fault insurance system without using public tax dollars.

That is amazing.

It is also being completely lost in the current political debate about No-Fault “reform.”

The easy fix: Preserving No-Fault and lowering its costs

Yes, No-Fault insurance in Michigan is expensive. But there is an easy fix that preserves the strengths of our current system, and that significantly lowers its costs.

Before we dismantle an insurance system that has been universally lauded by experts as a model system, we should be asking the question that so far, the two leading forces behind the push to destroy Michigan No-Fault insurance are not asking – the Republicans in the Michigan Legislature and the auto insurance industry that contributes and funds them: Why is No-Fault so expensive today?

And here’s the tragedy: We’re about to lose the best insurance system in the country because no one is looking at the simple fix.

The reason No-Fault is so expensive in Michigan is because the insurance companies are making huge profits on their auto No-Fault lines of insurance. The Republican legislators (and inexplicably, Virgil Smith, the Democratic from Detroit) completely ignore this point, which could significantly lower the cost of auto No-Fault for everyone, while keeping intact a system that provides better and more comprehensive health care coverage to Michigan drivers.

The simple fix is to regulate insurance company profits in order to save Michigan drivers money on their No-Fault premiums.

I realize people may read this think that because I’m a lawyer helping people in car accidents and no fault disputes with insurance companies, I’m biased in favor of our current system. That is true, and it is exactly the past nearly twenty years helping auto accident victims as a lawyer that qualifies me to write this. As a Michigan No-Fault insurance lawyer, I see and help people every day while they’re recovering after catastrophic injuries, such as traumatic brain injury and spinal cord injury from auto accidents. And I see my clients receive a level of medical care that is better than any other, and at zero cost to the taxpayers.

I have read for years the studies that have repeatedly proclaimed Michigan’s No-Fault System the nation’s best, and I read the Angoff study from 2007 that warned that it was the auto insurers who were jeopardizing the current system by charging outlandish amounts and reaping record-breaking profits.

Why regulating insurance company profits is politically unthinkable

The fix to regulate insurance company profits is actually politically unthinkable. We would have to ask the Republicans who control the Michigan House and Senate to pass legislation to give the Michigan insurance commissioner the same power that insurance commissioners have in most other states: the power to regulate the amount of profits that auto insurance companies can charge us for No-Fault insurance, a product that we are legally required by the state of Michigan to purchase.

That simple, reasonable fix is impossible in our post-Citizens United world of unlimited corporate campaign donations. And these politicians who are most willing to destroy our current system are also the main beneficiaries of this new largesse. And this largesse in the form of campaign contributions comes from insurance companies that want, and will likely now get, the best of both worlds – abolishing payments by replacing our current No-Fault system with PIP Choice, while boosting still higher insurance company profits in what is already the nation’s most profitable state to sell auto insurance.

A second simple fix is to address the cause of where the bulk of rising costs are today, which is comprehensive and collision coverage. There is no need to destroy our unlimited medical care and coverage. Comprehensive and collision coverage are the real cost drivers. These insurance coverages are not mandatory, but they are coverages that many people buy. The cost of collision can be contained in other ways. Destroying unlimited PIP, the crown jewel of No-Fault, is not what is causing the problem.

Destroying Michigan No-Fault: Politics at its most cynical and tragic

We created 40 years ago with one sentence — not thousands of pages of legislation as today — a health care system for auto accident victims that has been proven better than anything else that has come before or since in this country.

But instead of asking how to duplicate and replicate this across the nation, we are watching as political forces with special interests clearly adverse to what is best for the public good, make ready to destroy No-Fault and replace it with PIP Choice, a system where those that need it most are going to have it least. A $50,000 limit, which is in the most current PIP Choice bill, is wiped out after a few days in an emergency room. After this, the entire cost of medical care and rehabilitation for that person’s medical care for an entire lifetime will be shifted to the taxpayers and to Medicaid.

This is what the Republicans want to replace No-Fault with?

This tragedy will occur because no one today was willing to ask about the most simple and easy way that we could have taken to preserve the current No-Fault system by significantly lowering its costs.

Asking the same politicians who receive campaign donations from the profits the insurance industry makes to reform insurance company abuse – that is the main driver of the escalating cost of No-Fault insurance – is unthinkable. So we will destroy our No-Fault system instead, and replace it with something far worse and far more costly for everyone.

How tragic.

Steven Gursten is recognized as one of the nation’s top lawyers handling serious auto accident cases and insurance litigation. He writes about insurance company abuse and the Michigan No-Fault insurance laws, and is available for comment.

Related information:

Michigan No-Fault “reform” – bad for drivers, great for insurance companies

Injured Michigan accident victims can’t afford “savings” from proposed No-Fault “reform”

What are my Michigan No-Fault insurance benefits?

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (800) 777-0028 for a free consultation with one of our No-Fault insurance lawyers.

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