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Top 6 reasons to say “NO” to House Speaker’s new No Fault “Reform” plan

February 24, 2014 by Steven M. Gursten

Temporary savings, permanent benefits cuts, MCCA secrecy, unused cost-controls & discrimination against poor plague latest plan to dismantle No Fault

House Speaker Jase Bolger

Last Thursday, Michigan House Speaker Jase Bolger (R-Marshall) introduced his new plan for No Fault “reform,” stating that it’s “compromise” legislation to No Fault House Bill 4612.

But there are very good reasons to say “No” to the latest plan to dismantle No Fault.  Top of my list is the fact that, overall, auto insurance consumers stand to lose a lot more than they’ll gain, while the reverse is true for auto insurance companies.

Michigan’s No Fault system, with the essential protections and benefits it guarantees to seriously and catastrophically injured auto accident victims, is too important to be “reformed” in the manner suggested by Speaker Bolger.

To address the shortcomings of Speaker’s Bolger’s plan (which was verbally shared with the media, but no written, detailed plan has been released to the public), I will be sharing a series of blog posts discussing my top 6 reasons for opposing this latest auto-insurance industry-backed effort to dismantle Michigan’s No Fault auto insurance system.

In today’s blog post, I wanted to identify the main points of Speaker Bolger’s plan and lay out my reasons for why lawmakers – and the public – should say “No.”

Here’s what Speaker Bolger has proposed:

  • A two-year 10%  auto insurance premium reduction.
  • A “new a subset of the MCCA [Michigan Catastrophic Claims Association].” (Per MLive’s Jonathan Oosting)
  • A medical-provider “fee schedule” that would restrict doctors’ and hospitals’ charges for treating auto accident victims to 125% of the rates charged to injured workers (per the workers compensation fee schedule).
  • A $10 million cap on No Fault medical benefits, replacing the existing guarantee of reasonably necessary and reasonably priced lifetime No Fault medical benefits.
  • A low-cost No Fault auto insurance option, with a $50,000 cap on No Fault medical benefits, for individuals who earn up to 133% of the federal poverty level, e.g., approximately $15,000 per year.

Here are my Top 6 reasons for opposing Speaker Bolgers’ so-called No Fault “reform” plan, which will be reviewed throughout the week:

  1. Savings from  No Fault ‘reform’ plan are raw deal for consumers.
  2. Savings from No Fault ‘reform’ plan are not all that they appear to be
  3. No No-Fault reform until the Michigan Catastrophic Claims Association (MCCA) releases claims & assessment data.
  4. Existing cost controls built into Michigan’s No Fault Law make a medical-provider ‘fee schedule’ unnecessary.
  5. Capping No Fault medical benefits won’t guarantee savings for Michigan auto insurance consumers.
  6. The ‘Low-Cost’ No Fault option won’t guarantee savings for consumers & discriminates against the poor.

Included in the blog post series this week will be proposals for consumer-oriented No Fault reform, which are geared toward improving both No Fault’s benefits and protections and No Fault’s ability to provide meaningful and long-term savings for auto insurance consumers.

In tomorrow’s installment in the blog post series, I will discuss why the proposed “savings” in Speaker Bolger’s so-called No Fault “reform” plan are a raw deal for auto insurance consumers.

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3 Replies to “Top 6 reasons to say “NO” to House Speaker’s new No Fault “Reform” plan”

  1. Steve: Here are a few more:

    7. When insurance companies get the benefit reductions they seek (numerous “tort reform” examples all over the country), the promised premium reductions almost never materialize.

    8. If benefit limits are capped at $10,000,000 in catastrophic claims, the benefits will surely run out and the taxpayer will have to pick up the differences in medicaid/medicare benefits.

    9. Because of common/every day pocketbook issues and because the average consumer has a “can’t happen to me” attitude, the average consumer will opt for inadequate, cheaper, coverage, which will, in turn, cause the same problem outlined in my #8. The taxpayers will be on the hook for the difference and, as you point out, the poor will have less coverage.

    I’ve got more, but time and space are limited. I don’t understand why Republicans would be for this plan. I thought that this was the “personal responsibility, limited public option” party? Someone will have to explain to me why a Republican would want a law that provides full coverage to citizens who need medical/hospital care resulting from an automobile accident to change to one where the taxpayer is saddled with the bill for the difference between coverage and actual loss. Bolger’s plan shifts the bulk of the payment burden from the victims’ own insurance company (which received substantial premium dollars) to the taxpayer. What Republican would be in favor of that?

    1. Mark Bello, you’re right on the money! For all of the hoopla about how this latest plan for so-called No Fault “reform” is going to increase the No Fault system’s efficiency, reduce costs and make auto insurance “affordable” for Michigan consumers, there’s precious little in the proposal to ensure that last part of the equation. Overall, given the drastic restrictions on No Fault benefits and protections and the paltry, temporary “savings,” the plan is a raw deal for consumers because they stand to lose a lot more than they stand to gain. For instance, Speaker Bolger promises 10% savings for two years. Yet, right off the bat, that amount is reduced by an annual $25 HICA tax. What about other fees and assessments that may prove to tucked away in the “fine print” of the bill that Speaker Bolger ultimately introduces?

  2. I am a 23 year old man an i can not believe how much i had to pay for no fault this year it was 345 down an 245 a mounth THAT IS CRAZY it has went up 3-4 times sence i started driving…

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