8 reasons Duggan’s ‘D-Insurance’ Plan is “D-angerous” for Detroit

“D-isappointing,” “D-isconcerting,” & “D-istasteful,” Mayor Duggan’s insurance proposal disappoints for these reasons

For a plan this bad, Detroiters ought to be saving a ton more money on auto insurance under Mayor Mike Duggan’s D-Insurance Plan.

But they aren’t.

Mayor Duggan is talking about a 25% to 35% savings.  That means Detroiters will still pay more than people in surrounding cities and suburbs.

And for the privilege of STILL paying more than their neighbors, Detroiters are giving up a lot. To start, they would be agreeing to a $25,000 cap on all medical care and treatment – and wage loss and replacement services.

Here’s what’s “D-evastating” about Duggan’s D-Insurance Plan for Detroiters

Under Duggan’s plan, Detroiters lose out in the following ways:

• $25,000 No Fault cap: For all No Fault medical care, wage loss AND replacement services – combined.
• Managed care – No choosing their own doctors: Auto accident victims would no longer be able to choose their own doctors. Instead, they would be required to see a doctor in their insurer’s “limited provider network.” Based upon what happened in workers comp, these doctors will have every incentive to keep people within the $25,000 medical No Fault cap.
• Pre-authorization based on necessity: The D-Insurance plan will require “preauthorization” for medical treatment and care based on what the insurer determines is a “medical necessity.” This is an incredibly high threshold, and in reality it means critical medical treatment can now easily be refused since preauthorization is now required.
• No guarantee of long-term savings: Even though savings have been “promised,” none are guaranteed by the D-Insurance Plan.

D-Insurance Passes Michigan Senate Insurance Committee

On June 3, 2015, a little more than two weeks after Mayor Duggan testified at a Committee hearing, the Senate Insurance Committee approved the Motor City mayor’s “D-Insurance Proposal” and recommended its passage by the full Michigan Senate.

The D-Insurance Plan, which is identified as the “Substitute for Senate Bill No. 288” or “S-3,” is a substitute for Senate Bill 288.

Here are the top eight “D-isagreeable” details about Duggan’s  D-Insurance Plan.  This is a really bad deal for Detroiters.

1. No guaranteed savings. The Senate Insurance Committee’s version of the D-Insurance Plan (“Substitute for Senate Bill No. 288”) contains no guarantee of meaningful, long-term savings for consumers. Even Mayor Duggan has repeated stated to the media and in his May 26, 2015, written testimony to the Senate Insurance Committee that his “D-Insurance Proposal” will “cut rates 25-33%” – assuming consumers agree to the plan’s “Limited Benefit Option” – generating “$1,000 Savings for Many Detroiters.”  This still puts it financially out of reach of many of the 50% of Detroit residents who now drive without insurance. It also fails in Duggan’s stated aim for D-Insurance, as Detroiters will still pay more than those who live in the suburbs.
2. No ‘full, unlimited No-Fault benefits.’ Under the D-Insurance Plan, an automobile accident victim is entitled to “only limited [No Fault] benefits and not full, unlimited No-Fault benefits.” (Page 7)
3. $25,000 cap on all No Fault benefits for non-critical medical care, wage loss AND replacement services. Under the D-Insurance Plan, an auto accident victim’s combined No Fault medical, wage loss and replacement services benefits would be capped at $25,000 (page 20). In other words, if after leaving the hospital, a crash victim needs an MRI, a back or neck surgery, requires physical and/or occupational therapy, attendant care post-surgery, replacement services and reimbursement for lost wages, then his or her auto insurer will be required to pay only $25,000 of those costs.  After this, it is essentially financial ruin, personal bankruptcy and Medicaid for the injured auto accident victim.
4. $250,000 cap on “critical care” medical costs. Under the D-Insurance Plan, an injured auto accident victim’s “critical care” coverage (i.e., emergency room and/or trauma center until the point that the victim is stabilized) is capped at $250,000 (page 20). Significantly, the $250,000 in coverage does not transfer over to and/or cover non-“critical” medical care or “charges relate[d] to poststabilization services.” Once an auto accident victim is “stabilized,” i.e., the “individual can safely be discharged or transferred to another acute care hospital or trauma center or to a rehabilitation or other facility,” then the $250,000 in “critical care” coverage terminates – regardless of how much of the $250,000 may have gone unspent.
5. No catastrophic coverage. Under the D-Insurance Plan, an auto accident victim who suffers a catastrophic injury will not be covered by the Michigan Catastrophic Claims Association. But, instead, will need to rely on his or her health insurance company, on Medicaid/Medicare, on his or her personal services, resources and/or assets, on lawsuits against the at-fault drivers and/or go without the treatment and services they need for their care, recovery and rehabilitation. For more about the consequences of the D-Insurance Plan’s proposed cap on No Fault benefits, please check out my blog post, “Duggan’s ‘D-Insurance’ plan is bad deal for Detroiters.”
6. No choice of doctor for auto accident victims. Under the D-Insurance Plan, an auto accident victim could be forced into an auto insurer’s “limited provider network,” i.e., managed care, where “the insurer may require an injured individual … to obtain” treatment and care “from a provider … that is part of the [insurer’s] limited provider network” (page 25). As an accident attorney, I believe this is one of the ugliest and nastiest parts of this plan. I see the doctors that are selected to do this finding every reason possible to keep people within the $25,000 total No Fault cap, even when diagnostic testing and referral to medical specialists is desperately needed.
7. No medical care without ‘preauthorization.’ Under the D-Insurance Plan, an auto accident victim could be required “to obtain preauthorization from the insurer” before receiving treatment and care – even from “an in-network provider.” Significantly, when an insurer requires “preauthorization,” the insurer “shall only grant preauthorization if medical necessity has been demonstrated.” (Page 26)
8. No ‘preauthorization,’ then auto accident victims pay. Under the D-Insurance Plan, if an auto insurer requires “preauthorization” before an auto accident victim/insured receives medical treatment and/or care, but the crash victim fails “to obtain written preauthorization,” then that “renders a claim for payment [for the victim’s treatment or care] void,” which means the victim will become financially liable for the bill.   (Page 26)

Our “not terrible” category

The only aspect of the D-Insurance Plan that I can at least classify in the “not terrible” category is that the Senate Insurance Committee’s version of SB 288 does not alter the No Fault Law’s provisions allowing car accident victims to sue for “excess” economic loss and wage loss.

Under MCL 500.3135(3)(c), an auto accident victim can file a tort, third-party lawsuit against the at-fault driver to collect “[d]amages for allowable expenses [medical treatment and care costs] … [and] work loss … in excess of the daily, monthly, and 3-year limitations contained in those sections” of the No Fault Law.

Presumably, this will include costs over the $25,000 cap amount. Of course, this won’t help the auto accident victim if he or she has health insurance or ERISA insurance with subrogation rights on his or her tort settlement.

It also won’t help if the person who causes the car accident is driving around with minimum $20,000 bodily injury policy limits, while the injured has medical bills in the tens or hundreds of thousands of dollars (and remember, no MCCA reimbursement or payment under D-Insurance). Under either event, the person still suffers the fate of so many in non-No Fault states who suffer serious personal injury in motor vehicle accidents:

At the end of the day, they lose their savings, they declare personal bankruptcy because of high medical debts, and they turn to Medicaid.

Wonder how those Republicans in the suburbs will like explaining to their constituents about how they will be paying, as taxpayers, the burdens and the costs of medical care and treatment for all of those Detroit automobile accident victims, as the cost is transferred from No Fault to the rest of Michigan as taxpayers?