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Detroit News gets it wrong on D-Insurance

March 8, 2016 by Steven M. Gursten

The Detroit News calls for Legislature to ‘Move on D-Insurance,’ but fails to convey just how bad D-Insurance will be for Detroit residents, auto accident victims

Detroit Mayor Mike Duggan introduced D-Insurance, which is all wrong for the city.
Detroit Mayor Mike Duggan introduced D-Insurance, which is all wrong for the city.

The Detroit News recently tackled the issue of No Fault reform in its March 6, 2016, editorial, “Legislature should move on D-Insurance.”

Simply stated, D-Insurance is a disaster. The failure of Mayor Mike Duggan, his D-Insurance plan and The Detroit News to acknowledge the plan’s major flaws and instead to press on and encourage its adoption is inexplicable.

D-Insurance is far worse than it appears

The Detroit News touts the fact that “D-Insurance plans would cap health care benefits at $275,000.”

Not true. For nearly everyone injured in an automobile accident, the real cap is $25,000. That’s a very big difference that both Mayor Duggan and The Detroit News essentially ignore completely.

The $250,000 applies only to emergency room care, i.e., critical care. The remaining $25,000 must be stretched out over the years that follow to cover all of an auto accident victim’s medical bills and wage loss benefits as well as replacement services.

As I explained in my blog post, “8 reasons Duggan’s ‘D-Insurance’ Plan is “D-angerous” for Detroit:”

  • $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.”
  • $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.”

D-Insurance doesn’t eliminate Detroit consumers’ cost problems – it adds to them

Inadvertently, perhaps, The Detroit News correctly identifies the disconnect in the D-Insurance plan. Specifically, the paper observes that Detroit drivers would save approximately “30 percent” on auto insurance if they opted out of the No Fault law’s existing “unlimited medical coverage” and went with the D-Insurance plan’s $275,000 cap on No Fault medical benefits.

But, no sooner does The Detroit News make this observation than the paper states the obvious corollary to the above savings:

“[A]dditional costs would be picked up by Medicaid, Medicare, other employer-provided insurance plans or plans bought through Obamacare.”

In other words, the costs to consumers will not be eliminated by D-Insurance, they will merely be shifted. In particular:

  • Health insurance costs will increase.
  • Medicaid and Medicare tax burdens will increase for everyone.
  • Auto accident victims and their families will have to pay more out-of-pocket, thus depleting savings, retirement and college accounts. We can reasonably expect that for people seriously injured in automobile accidents, personal bankruptcies due to medical debt will skyrocket.
  • Faced with the high costs of health care and without the insurance coverage and/or personal resources to pay, more auto accident victims will be forced to go without necessary medical care. Also, as L. Brooks Patterson has correctly pointed out, the quality of medical care will be diminished for us all.

To learn more, please check out my blog post, “Duggan’s ‘D-Insurance’ plan is bad deal for Detroiters.”

Managed care is a bad substitute for No Fault when you need medical care

The Detroit News completely fails to address the drastic changes that D-Insurance brings to the way that medical care is provided to Michigan auto accident victims. In particular, under the D-Insurance plan, auto accident victims will subject to a “managed care” system of medical care. What that means is the following:

  • 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.
  • 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)
  • 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)

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