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Today’s House Insurance Committee treats us like we’re stupid, leaves MI with highest auto insurance prices in the U.S.

Insurance companies receive  attendant care restrictions and price controls to boost profits, but for consumers, there’s only one year of $100 savings, leaving Michigan as costliest state by $500

House Insurance Committee Chair, Rep. Tom Leonard (R-Clinton County)

House Insurance Committee Chair, Rep. Tom Leonard (R-Clinton County)

Today, the House Insurance Committee fumbled the ball. The Committee passed a revised version of Senate Bill 248, leaving Michigan still No. 1 as the most expensive state for auto insurance.

Instead of passing meaningful reform to save consumers money, the House Insurance Committee approved two items on the insurance industry’s most wanted wish list:

  1. New, unprecedented and permanent restrictions on in-home attendant care, and
  2. Price controls on what doctors and hospitals can charge for treating Michigan car accident victims.

None of this will lower the price of auto insurance for consumers, mind you.

This is simply taking No Fault insurance benefits and desperately needed medical care and attendant care from the automobile accident victims who need it most, and transferring this in the form of savings to the insurance companies so they can further boost their bottom lines.

And in exchange, we get a lousy $100 savings, one-time only.

Oh, and insurance companies can start raising our premiums again starting June 30, 2018.

This is truly a deal only an insurance company can love.

And despite the incredulous claims from the lobbyists from the auto insurance companies that changes to Michigan’s No Fault system will make auto insurance more “affordable” for consumers (something even Pete Kuhnmuench from the Insurance Institute of Michigan admits is not true), Michigan’s auto insurance prices will continue to be the highest in the nation.

A closer look at what happened today

Today, April 23, 2015, on a 9-6 vote (9 Republicans to 6 Democrats) the House Insurance Committee approved “House Substitute for Senate Bill No. 248,” which guarantees only $100 in savings for auto insurance consumers and prohibits auto insurance companies from raising prices for only two years.

  • First, auto insurance consumers won’t see any savings until they buy or renew their auto insurance on June 30, 2016.
  • Second, they will save only $100.  That’s $100, one-time.
  • Third, after two years (i.e., after June 30, 2018), auto insurers can raise prices, again.

To put the savings into perspective, consider that with the $100 reduction, Michigan’s auto insurance prices will still be the highest in the U.S. – by nearly $500.

According to Insure.com’s “Car insurance rates by state, 2015 edition,” Michigan’s “average car insurance premium[]” is $2,476.

With the House Insurance Committee’s $100 in savings, Michigan’s average auto insurance premium would drop to $2,376 – which is nearly $500 more than the $1,886 paid by auto insurance consumers in Montana (the state with the nation’s second highest auto insurance prices).

Insurance companies win big, Michigan consumers lose big

Whereas we save $100, one time, the auto insurance companies will save 55% to 64% as a result of the “substitute” bill’s price controls on doctors and hospitals.

To learn more, please check out Michigan Auto Law’s blog post, “Who will cash in on No Fault ‘reform’ fee schedule?”

To date, the auto insurance industry has failed to disclose how much it will save from taking these No Fault insurance benefits away from the people who need it most.  And the  politicians who supported SB 248 have failed to make the insurers disclose how much auto insurers will save as a result of the proposed attendant care restrictions in the “House Substitute for Senate Bill No. 248.”

Savings?  What savings for consumers?

The House Insurance Committee’s “House Substitute for Senate Bill No . 248” requires that Michigan auto insurance companies lower auto insurance prices as follows:

  • “$100.00 reduction in the annual per-vehicle premium” on auto insurance policies issued or renewed after June 30, 2016.
  • The “reduction” is from prices that were “in effect for the insurer on January 1, 2016.”
  • Auto insurance companies “shall not increase in insured’s premium … before June 30, 2018.”

Attendant care restrictions

The attendant care restrictions in the House Insurance Committee’s “House Substitute for Senate Bill No. 248” include the following restrictions on in-home attendant care provided by a family or household member:

  • A maximum reimbursement rate of $15 per hour “regardless of the level of care provided.”
  • However, the $15 per hour reimbursement rate maximum does not apply if “the family or household member [who is providing the in-home attendant care] is licensed or otherwise authorized to render the attendant care under … the Public Health Code, or is employed by, under contract with, or in any way connected with an individual or agency who is licensed or authorized to render the care.”

The House Insurance Committee’s “substitute” bill provides that the in-home attendant care restrictions will apply “after June 30, 2016.”

Price controls on doctors and hospitals

The provision of the “House Substitute for Senate Bill No. 248” that imposes price controls on what doctors and hospitals can charge for treating Michigan auto accident victims states the following:

  • Doctors and hospitals “may charge a reasonable amount” for treating Michigan car crash victims, but “[t]he charge shall not exceed the amount the person or institution customarily charges for like products, services and accommodations in cases that do not involve insurance.”
  • Doctors and hospitals “shall accept as payment in full” for their services in treating Michigan car crash victims “the lesser of the amount charged or 150% of the amount that would be paid under Medicare.”

The House Insurance Committee’s “substitute” bill provides that the price controls on doctors and hospitals will apply “after June 30, 2016.”

Additionally, it’s believed that House Insurance Committee’s substitute bill provides that the in-home attendant care restrictions will apply “after June 30, 2016.”

It’s expected that the House Insurance Committee’s “House Substitute for Senate Bill No . 248” will be sent to the full House for consideration.

What you can do

If you want to speak out against this legislation, contact the House representative in your district and urge him or her to vote “NO.” You can locate your representative here.

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Blog Author Steven M. Gursten
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