Hint: Ask consumers in New York, New Jersey, and Florida
In today’s installment of our blog post series on the recent proposals to change Michigan’s No Fault auto insurance system, I will analyze House Speaker Jase Bolger’s proposal for a $10 million cap on No Fault medical benefits. This cap would replace the existing guarantee of reasonably necessary and reasonably priced lifetime No Fault medical benefits.
And Speaker Bolger, Gov. Rick Snyder, many Republican lawmakers and the insurance industry in Michigan (who have been the real drivers for all of this, pushing their “reform” wish-list) want this cap.
But does capping No Fault medical benefits guarantee that there will be any savings? Or, have we seen this all before?
Is this the industry playbook, akin to previous tort “reform” legislation that the insurance industry has pushed, such as it did in 1995, where the promises of savings are used to pass legislation that takes our legal rights away?
Using the 1995 example: Despite enacting the harshest third-party auto tort laws in the nation in 1995, the insurance industry went right on raising insurance rates, despite their promises that insurance rates would fall if tort reform were passed. Insurance company profits, however, did go up during this time. Significantly.
Capping No Fault medical does not guarantee any savings on auto insurance
If you believe imposing a medical cap on No Fault insurance in this state will lead to savings on the prices consumers pay for auto insurance, better ask consumers in New York, New Jersey and Florida.
Consumers pay more for auto insurance in those states than consumers do in Michigan, even though No Fault medical benefits are capped at dollar amounts far below what’s already legally guaranteed to consumers under Michigan’s No Fault law.
In Michigan, where the No Fault Law guarantees reasonably necessary and reasonably priced lifetime No Fault medical benefits for auto accident victims, auto insurance costs $1,100, according to the Insurance Institute of Michigan and the National Association of Insurance Commissioners.
However, in New York, New Jersey and Florida, where No Fault medical benefits are capped at $50,000, $15,000, and $10,000, respectively, auto insurance costs $1,234, $1,301 and $1,160, respectively, according to average premium data from the National Association of Insurance Commissioners.
Additionally, capping No Fault medical benefits may increase consumers’ financial burdens.
If we cap No Fault, the money has to come from somewhere. Ready for higher taxes?
Because medical claim costs for catastrophically injured auto accident victims will still exceed the cap, auto insurance consumers will still experience the following:
- Increased health insurance costs.
- Increased Medicaid and Medicare tax burdens, as costs are shifted from insurance companies to the rest of us as taxpayers as people are forced onto Medicaid to pay for medical treatment for serious auto accident medical care.
- Litigation and related litigation costs to recover medical benefits in excess of the cap.
In tomorrow’s installment in the blog post series, I will discuss why the proposed “low-cost” No Fault option will not guarantee savings for consumes and discriminates against the poor.