Today I’m sharing a guest post from State Rep. Rudy Hobbs (D-Southfield), who is also the House Democratic Floor Leader. Rep. Hobbs is discussing his thoughts on No Fault changes proposed under HB 4612, and how these changes to the Michigan No Fault law would negatively affect Michigan drivers, taxpayers and crash victims:
“Michigan’s auto no-fault insurance system is highly regarded as one of the best designed plans in the nation. Recently, however, a handful of Lansing Republicans launched an effort to “reform” our gold standard by removing necessary protections for Michigan drivers under the guise that it will save money. This is simply not true.
Under our current no-fault system, drivers in Michigan have peace of mind knowing that if they are ever in a catastrophic accident, their medical bills will be covered for the rest of their lives. But if the Republicans have their way, in-home care and rehabilitative services will be limited to hours and weeks of treatment, and medical benefits capped at $1 million — an amount that could leave people who have survived catastrophic accidents in serious financial distress in order to continue their medical care.
Built into this plan is a one-year promise that auto insurance premiums would decrease by about $10 a month in 2014. After that, insurance companies are free to raise their premiums again and drivers will remain in a vulnerable position with capped benefits.
Michigan’s long term quality of care under our current no-fault system is worth more than a one-year promise of $10 a month. When it comes down to it, the Republican party and the insurance industry are only offering individuals a lifetime savings of $120 in exchange for a lifetime of fully funded care.
On top of that, this comes during a time when Republicans in the Senate are refusing to expand Medicaid coverage. Their no-fault “reform” plan, if enacted, would force people who have been in serious accidents and have no other source of health insurance into the Medicaid system, but only if they’re eligible, i.e., once they spend down their savings.
The real issue at play here is two-fold: profits, not benefits, driving up costs, along with rates that are based on credit scores and zip codes. Together, these factors are contributing to a crisis in places like Detroit, where the average cost to insure a car is about $495 a month, or $5,948 a year, according to the Insurance Institute of Michigan.
The cost for this necessary protection is simply out of reach for many residents across Michigan, and especially for those in our urban areas. Further, when this protection is out of reach and drivers are forced by the system to remain uninsured, they are ineligible to receive any form of compensation or benefits if injured in an automobile accident.
I agree Michigan needs to address the rising cost of no-fault coverage, but limiting benefits for our most vulnerable is not a proven way to do this. Our great system only works when people are insured. This should be our single greatest focus when discussing any kind of reform to our system — increasing accessibility in a race to the top, not reducing benefits in a race to the bottom.
This is why I support the package of auto no-fault reform bills proposed by my House Democratic colleagues. While most of the bills are still being drafted, our plan will be centered on the driver, focused on reducing rates and increasing insurer accountability while leaving medical benefits intact. We plan do this by requiring insurance companies to justify rate hikes, requiring companies to spend at least 80% of premiums on benefits to policy holders, and banning companies from considering credit history, education, and occupation when determining rates. Additionally, the proposed plan would re-structure the Michigan Catastrophic Claims Association, currently composed of insurance company representatives, with public interests in mind.
In contrast, the Republican plan only promises to lower expenses to big insurance companies while leaving drivers like you and me exposed with greater uncertainties. They are only offering inadequate, short-term solutions with no real monetary savings in exchange for a lifetime of protection. I don’t want that for our families.
I can’t support any kind of no-fault “reform” which fails to permanently lower costs for individual plans and guarantees people with catastrophic injuries will not receive the proper care and protections they deserve.”