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Savings from Jase Bolger’s No Fault insurance plan are a raw deal for consumers – but great for insurance companies

February 25, 2014 by Steven M. Gursten

Latest plan for dismantling Michigan No Fault takes away  permanent losses in PIP benefits, for 2 years of  insignificant savings and a new tax to boot


Yesterday, I introduced my blog series on my top 6 reasons to say ‘No’ to House Speaker Jase Bolger’s new No Fault “Reform” plan. In today’s post, let’s look into Speaker Bolger’s claim that, under his plan, auto insurance consumers will experience “savings.”

Bolger has promised a two-year 10%  auto insurance premium reduction.

That’s it.

And these “savings” are a flat out,  bad deal for auto insurance consumers. They are insignificant.  They are temporary. They are partially offset by a new tax.

On the other hand, the loss of No Fault benefits and vital legal protections for people seriously injured in automobile accidents are permanent. And very, very substantial.

The approximate savings for consumers is $110 per year for only two years – less Speaker Bolger’s new $25 annual Health Insurance Claims Assessement (HICA) tax (which I’ll discuss tomorrow). This number is based on Michigan’s average auto insurance premium of $1,100, according to the Insurance Institute of Michigan and the most recent data from the National Association of Insurance Commissioners.

Now, contrast that with all of the No Fault benefits and protections that we know auto insurance consumers will lose under the “deal” that Speaker Bolger has shared with the media:

  • Permanent and unprecedented elimination of reasonably necessary and reasonably priced lifetime No Fault medical benefits. Replaced by a cap on benefits.
  • Permanent and unprecedented elimination of No Fault coverage for full charge of medical expenses. Imposition of a fee schedule on medical providers.
  • Permanent and unprecedented restrictions on No Fault coverage for attendant care services. Restrictions appear identical to those proposed in last year’s House Bill 4612.

Until Speaker Bolger releases to the public a detailed, written version of his plan, we won’t know if that’s the entirety of consumers’ losses  under his plan.

For instance, Speaker Bolger’s plan may ultimately include the loss of the following No Fault benefits and protections, which were also targeted for elimination in the so-called No Fault “reform” bill (House Bill 4612) that was introduced last year and backed by Gov. Snyder:

  • New, unprecedented and permanent restrictions on rehabilitation benefits.
  • New, unprecedented and permanent restrictions on home modification benefits.
  • New, unprecedented and permanent restrictions on vehicle modification benefits.
  • New, unprecedented and permanent restrictions on the ability of auto accident victims to challenge auto insurers’ denials and terminations of No Fault benefits.
  • New, unprecedented and permanent denial of auto accident victims’ right to a jury trial on the reasonableness of medical charges and whether No Fault benefits were unjustly denied and/or terminated.
  • Retroactive application of No Fault changes to pending and existing cases.

“Savings” and the “free market” double standard

Do “free market” principles mean that it’s okay for the government to regulate the prices that doctors and hospitals charge for treating auto accident victims, not the prices that auto insurance companies charge to consumers?

While you’re pondering that, consider what Tom Shields of the Michigan Insurance Coalition told Kathy Gray of the Detroit Free Press about the promised savings in Speaker Bolger’s No Fault plan:

“‘Despite our support for the positive ideas the speaker has put together, we continue to oppose government-mandated rollbacks in a free market system.’”

So… insurance companies are for the free market when it comes to unrestricted profits.  But they are definitely for government mandates and government regulation when it helps to other third-parties (see below) if it helps these auto insurance companies to further increase profits.

It also lays bare the Michigan Insurance Coalition’s absolute lack of sympathy or concern for auto insurance consumers whose family budgets are being “strangled” (Speaker Bolger’s term) by auto insurance prices.

Finally, it’s  interesting because the Michigan Insurance Coalition’s resolute position on strict adherence to “free market” principles apparently doesn’t extend to Speaker Bolger’s proposed medical-provider “fee schedule” which would impose “government-mandated” restrictions on what doctors and hospitals charge for treating auto accident victims.

Ironically, in response to the House Speaker’s “fee schedule” proposal on medical doctors and hospitals, the MIC voiced no objection. And Speaker Bolger completely ignores why so many doctors and hospitals are forced to charge more – which is because of the behavior of the auto insurance companies themselves when it comes to paying legitimate claims in a timely manner.

This bad behavior by the insurance companies would also be completely exempt from the new “fraud authority,” which will likely only focus on consumers, and not at all on behavior of insurance companies. This would be regardless of how unlawful or unethical the insurance companies act, or how badly innocent people are harmed.

For more information, please check out Michigan Auto Law’s “Auto Insurance Consumers’ Guide To Michigan No Fault Reform & House Bill 4612.”

In tomorrow’s installment in the blog post series, I will discuss why the proposed “savings” in Speaker Bolger’s are not all that they appear to be.

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