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MI Senate harms consumers with No Fault “reform” SB 248

April 17, 2015 by Steven M. Gursten

Consumers lose out after Senate gift to car insurance companies

SB 248 Michigan No Fault reform

The definition of a “kickback” is a gift, usually given secretly by one who has been improperly influenced by another. That’s probably as good a word as any to describe what happened yesterday, when the Michigan Senate passed No Fault “reform” bill 248.

What the Michigan Senate did will not help consumers. It will not lower the price of auto insurance in this state.

On April 16, 2015, the full Michigan Senate, by a 21 to 17 vote, approved Senate Bill 248’s plan for changing No Fault insurance. These changes give the insurance industry a way to significantly increase profit margins at the expense of the most catastrophically injured auto accident victims in this state who need and depend on our No Fault laws the most.

It takes from those most in need, and gives to the giant insurance industry two of the biggest items on its profits wish-list.

Conspicuously lacking from the Senate-passed bill – just like the original SB 248 and the “substitute” bill that was approved by the Senate Insurance Committee on April 15, 2015 – was any guarantee of definite, quantifiable, meaningful and long-term savings for auto insurance consumers.

But that was never the goal of SB 248.

Instead, the main thrust of the Senate-passed bill is generating savings (read: profits) for Michigan auto insurance companies by implementing unprecedented, permanent restrictions on in-home attendant care and imposing price controls on what doctors and hospitals can charge for treating Michigan’s car crash victims.

This hurts not just the people who depend upon No Fault, but the hundreds of people who provide skilled medical care and medical treatment.

Who got how much money from the insurance industry

The insurance industry got a bunch of Republicans to vote against the interests of their districts. Heck, it got a bunch of Republicans to vote for price controls and against free market principles. And these Senators did this despite any transparency or clarity on just how much money the auto insurance industry is making (although the insurance industry is likely making record profits in this state), since Michigan is one of the few states that cannot regulate clearly excessive profit margins of insurers.

But I guess it’s not so surprising that so many Senators would’ve jumped when the auto insurance industry cracked the whip on what it wanted.

In fact, the insurance industry contributed more than $200,000 to the campaigns of at least five of the politicians who voted in favor of the Senate-passed version of SB 248, according to Progress Michigan’s report, “Big Donations from Insurance Lobby Go to Supporters of No-Fault Overhaul.”

Here’s who got what from the insurance industry:

  • Sen. Joe Hune (R-Hamburg Township), $108,075
  • Sen. Virgil Smith (D-Detroit), $36,800
  • Sen. Jack Brandenburg (R-Harrison Township), $23,550,
  • Sen. Margaret O’Brien (R-Portage), $30,000
  • Sen. Rick Jones (R-Grand Ledge), $24,100

SB 248 creates significant attendant care restrictions

The attendant care restrictions in the Senate-passed version of SB 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” and “regardless of whether the family or household member 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.” (Pages 43-44)

Price controls on doctors and hospitals who treat people injured in auto accidents

The provision of the Senate-passed version of SB 248, which imposes price controls on what doctors and hospitals can charge for treating Michigan auto accident victims states the following:

  • “[I]f an insurer or a corporation formed under 3104 does not agree with the amount charged [by a doctor or hospital for treating a Michigan car accident victim], the person or institution and the insurer or corporation shall negotiate to attempt to agree on a reasonable payment.” (Page 50)
  • “[I]f the parties are unable to reach an agreement, the insurer or corporation formed under section 3104 is not required to pay an amount that exceeds the average amount the person or institution customarily accepts from all sources for like products, services, and accommodations in cases not involving personal protection insurance, the program for medical assistance for the medically indigent under the Social Welfare Act, 1939 pa 280, MCL 400.1 to 400.119b, or the Federal Medicare Program established under subchapter xviii of the Social Security Act, 42 USC 1395 to 1395 lll.” (Page 50)

Having been passed by the full Senate, the Senate-passed version of SB 248 was sent to the Michigan House of Representatives, where it was assigned to the House Insurance Committee for consideration.

For more about SB 248 and the Senate Insurance Committee’s “substitute” bill, please check out Michigan Auto Law’s blog posts:

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