Lansing— Debate over no-fault auto insurance is heating up in Lansing with Republicans divided over a House bill that would eliminate lifetime medical coverage.
Michigan is the only state to offer unlimited lifetime medical care for people involved in life-altering car accidents, a benefit that proponents say drivers can no longer afford.
The bill would allow motorists to choose less expensive plans offering from $500,000 to $5 million in medical coverage, and would also enact cost-saving measures such as limiting the hours and pay for attendant care. Hospitals and doctors would be placed on a fee schedule in an attempt to bring down medical care costs.
"I don't feel what's proposed takes care of people and that's why I voted no," said state Rep. Mike Callton of Nashville, one of two Republicans on the House Insurance Committee to oppose the bill. The other was state Rep. Joel Johnson of Clare. Democrats also oppose the plan.
Supporters of the bill, including Michigan Insurance Commissioner Kevin Clinton, say changes must be made because the Michigan Catastrophic Claims Association, which covers medical bills over $500,000, is headed for insolvency. Opponents contend most motorists will opt for the cheapest policy, which won't meet their needs if they get in a serious accident.
"The uncertainty inherent in estimating unlimited (personal injury protection) … makes the current situation unsustainable in the long run and may place a significant financial burden on our citizens," Clinton testified in a contentious, packed hearing on no-fault reform.
The bill is now under discussion by the full chamber after passing out of the House Insurance Committee on Oct. 13.
Rep. Pete Lund, R-Shelby Township, chairman of the House Insurance Committee, said more residents will buy auto insurance if it's made more affordable as a result of reducing medical costs.
"We have some of the highest numbers of uninsured people in the country," Lund said. "And if you keep raising the price up higher and higher, you're going to have more people opting not to get insurance."
Drivers pay an annual assessment to the catastrophic claims association that goes into a fund to reimburse auto insurance companies. The association sets the assessment based on estimates of how much money is needed to cover the lifetime costs of people catastrophically injured that year, as well as to pay off the system's liabilities. The fee is $145.
Voters wary of past changes
Voters have twice thwarted efforts to modify Michigan's no-fault law. One measure to cap no-fault benefits was voted down in 1992. The Legislature passed a no-fault reform bill the next year, and in 1994 voters overturned it.
The Insurance Institute of Michigan reports that more than 99 percent of claims fall under $250,000 and the group argues that it's easy for medical providers to take advantage of Michigan's sweeping pledge of unlimited medical coverage.
"It's created an environment where the costs accelerate beyond anybody's imagination," said Pete Kuhnmuench, executive director of the institute, an association of about 80 property/casualty insurance companies.
Accident victims and their caregivers say it's not right to take away coverage that was guaranteed when they purchased their no-fault policies. No-fault law protects the insured from being sued for an auto accident except in certain situations, according to the state's Office of Financial and Insurance Regulation. .
Even though Donna Jones' son, Bradley, had gone through an accident, she said, "In the back of my mind I was relieved because with the no-fault law he was covered for life."
The Clinton Township mother provides care 24 hours a day for Bradley, 27, who suffered brain trauma in an auto accident at age 19.
Bradley spent months in hospitals and in a rehabilitation facility relearning how to swallow, eat and speak. He spent years in a wheelchair, but can now walk with a cane.
"We celebrate the date every year that he said his first word — it was Sept. 3, and his first word was 'cup,'" Jones said.
Jones spent so much time at her son's bedside she was fired from her job, she said, lost her home to foreclosure and had to move in with her mother. When Jones' son recovered enough to return home, no-fault auto insurance paid for her to provide 24-hour care. Eventually, the family was able to buy a house, which cost about $120,000 to make handicap accessible.
Pay could be cut
"Under the no-fault law, you have attendant care, which means a family member will get paid for taking care of the patient, so I was able to take care of my son while he lived in his own house," Jones said. "Otherwise, he would be in a group home and not with his family."
Jones is paid $13 an hour to care for her son. Under the House bill, Jones' pay would be capped at $11 an hour, and her son would be entitled to eight hours of attendant care per day. Jones' income would no longer allow her to stay home with him, and she fears Bradley would be forced into a nursing home to get the 24-hour care he needs.
"I'm losing medical benefits that provide him this house, and it's not only my son — there're thousands of people out there right now who are injured who are going through the same things."
Lund, the Shelby Township legislator, said out-of-control expenses for attendant care have contributed to the claims association $1 billion deficit.
"Eventually, this system will collapse," he said.
Laura Appel, vice president of federal policy and advocacy for the Michigan Health and Hospital Association, disagrees and said if the fund needs more money, the fee could be increased — just as it has been in previous years when there has been a deficit.
"Some years we're a little ahead, currently we're a little behind — and last year we were more behind," Appel said. "We continue to make up the deficit, and that's part of the process."
If Michigan's system is changed, the question of who pays for the medical bills will be hashed out in court, Appel said. Patients will ultimately exhaust all of their resources and end up on Medicaid.
"We have a very good system," she said. "We each take personal responsibility for the risk of driving, and we think that's a better system than using lawsuits and Medicaid."
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