Gov. Gretchen Whitmer and Republican leadership have been in talks through the weekend. The two sides are now attempting to reach enough common ground for Gov. Whitmer to sign No-Fault Reform legislation after the No-Fault bills raced through both Republican chambers of the Michigan Legislature.
And now the question that only a week ago seemed just a hypothetical is very real and very urgent.
Will Gov. Gretchen Whitmer veto (as she said she would) the auto No-Fault reform bill if it reaches her desk . . . as early as tomorrow, according to some sources.
How did we get here?
Auto No-Fault Reform Comes to Boiling Point
Significantly, on May 7th, MLive quoted Gov. Gretchen Whitmer as saying that “If this bill [Senate Bill 1] comes to my desk, I will veto it.” And on May 9th, the Detroit Free Press reported that Gov. Gretchen Whitmer wasn’t “interesting in signing” either SB 1 or HB 4397 “in their current form.”
On May 15, 2019, the House Select Committee on Reducing Car Insurance Rates took up Senate Bill 1. The Committee’s minutes show that the Committee introduced, approved and reported out a substitute bill (H-1) for the Senate-passed SB 1. A majority of the Committee rejected proposed amendments to prohibit auto insurers from basing premium rates on a driver’s “credit score” and/or “the postal zone in which the insured resides.”
Now, the substitute bill will go to the full House for consideration. It is expected that the House will take up the bill this week.
IMPORTANT: Michigan’s auto No-Fault law has not changed – yet.
Bills passed by the House and/or the Senate do not become law and result in changes to our auto No-Fault law until the Governor approves and signs a bill into law.
Based on the House Fiscal Agency’s 13-page Legislative Analysis of “Senate Bill 1 (H-1) as reported from House committee,” the substitute bill brings the Senate-passed SB 1 into line with the provisions of the House-passed HB 4397.
Specifically, it is expected that the version of SB 1 that was approved by the House Select Committee on Reducing Car Insurance Rates would propose the following:
- Abandoning some lawmaker’s insistence that our auto No-Fault needs to be scrapped and replaced by a pure tort liability system. Many lawmakers say this is the only way to truly drive down the nation’s highest auto insurance rates.
- Drastically overhauling No-Fault to the advantage of auto insurers and disadvantage of drivers and car accident victims by transferring costs from insurance to taxpayers and business owners who pay for health insurance. Auto insurance may go down, but taxes in the form of increased Medicaid spending for people injured in auto accidents will go up. Small businesses may see a sharp increase in health care costs for the same reasons.
- No-Fault PIP benefit caps at the following levels: $500,000; $250,000; $50,000; and no limit.
- Mandating premium rate reductions in the following percentages for the PIP portion of people’s insurance premiums for the above cap levels: 30%; 60%; 80%; and 10%. However, critics point out that as the PIP portion of auto insurance is only approximately 36% of insurance premiums, and as these are reductions only to the PIP portion of people’s insurance, that the overall savings will not be big enough to make auto insurance more affordable. Critics also say that these savings aren’t big enough when compared to what is being lost and taken away from Michigan drivers with the significant changes to lifetime necessary medical care.
- Allowing drivers with health insurance or Medicaid/Medicare to opt-out of No-Fault medical benefits.
- Prohibit auto insurers from setting rates based on non-driving factors such as sex (which is already prohibited under law but has not been enforced by the Department of Insurance & Financial Services (DIFS)) and other factors for which there is “no rational correlation between the factor and insurance losses.”
- Prohibit “redlining” – which means insurers cannot refuse to insure and/or limit coverage based on where a person lives. (However, neither SB 1 nor HB 4397 to date has endeavored to stop insurers from basing rates on where a person lives.)
- No-Fault medical-provider fee schedule based on the Workers’ Compensation fee schedule. (Note – the latest talk over the weekend is that the new fee schedule rates will be 135% of Medicare rates.)
- Limit No-Fault benefits for in-home, family-provided attendant care to 56 hours per week.
- Tolls the one-year-back rule for claiming overdue, unpaid No-Fault benefits.
Significantly, on pages 11-12 of its 13-page report, the House Fiscal Agency (HFA) describes how the bill would affect Michigan’s Medicaid costs:
“The state Medicaid program costs would increase to the extent that the bill would shift health care costs from private automobile insurers to Medicaid. HFA’s estimates indicate that this bill would increase state costs by $2.5 million in the first year and would steadily grow to approximately $72.0 million in annual state costs within 10 years. The annual cost growth would slow thereafter.”