House seeks auto in­sur­ance re­form

Plan would cut rates, cap prices for some med­i­cal providers

The Detroit News - - Front Page - BY JONATHAN OOST­ING Detroit News Lans­ing Bureau

Lans­ing — A new bi­par­ti­san state House plan to rein in the high cost of Michi­gan auto in­sur­ance would cre­ate price caps for some med­i­cal providers, es­tab­lish a new au­thor­ity to fight fraud and pro­hibit in­sur­ers from us­ing “non-driv­ing fac­tors” to set pre­mi­ums.

The pend­ing leg­is­la­tion, an­nounced Thurs­day by 15 state leg­is­la­tors, is not backed by Repub­li­can lead­er­ship. But it marks the open­ing salvo in what is ex­pected to be a heated fall de­bate over re­form­ing the state’s unique no­fault auto in­sur­ance law.

“Michi­gan driv­ers and ac­ci­dent vic­tims de­serve ac­count­abil­ity and best prac­tices from the in­sur­ance com­pa­nies and health care providers alike,” Rep. Ben Fred­er­ick, R-Owosso, told a large crowd out­side an an­nual Brain In­jury As­so­ci­a­tion of Michi­gan meet­ing.

House Speaker Tom Leonard, R-DeWitt, has been work­ing with Detroit Mayor Mike Dug­gan, a Demo­crat, on a sep­a­rate plan that has not yet been fi­nal­ized but could give mo­torists the op­tion to buy lower-cost plans that cap life­time med­i­cal ben­e­fits.

The “fair and af­ford­able no­fault re­form” pack­age an­nounced Thurs­day would not change the un­lim­ited life­time med­i­cal ben­e­fits cur­rently pro­vided for Michi­gan mo­torists in cat­a­strophic car crashes. In­stead, the pro­posal takes a broad ap­proach to ad­dress­ing what Fred­er­ick called a “com­plex web” of other fac­tors that can drive up costs.

“We can guar­an­tee a rate re­duc­tion of 20 to 30 per­cent for Michi­gan driv­ers with­out re­duc­ing ben­e­fits,” said Rep. Tim Greimel, D-Auburn Hills. He has in­tro­duced a sep­a­rate pro­posal that would man­date rate re­duc­tions

to re­flect those es­ti­mated cost sav­ings, but a Demo­cratic spokesper­son said it is not part of the new bi­par­ti­san pack­age.

Any pro­posal that re­quires rate re­duc­tions or sets hos­pi­tal fee sched­ules is sure to face re­sis­tance in the state Se­nate, where Ma­jor­ity Leader Ar­lan Meekhof, R-West Olive, has com­pared the prac­tices to “price fixing.”

“I’m fully in fa­vor of rate roll­backs, but just not man­dat­ing the gov­ern­ment rolling them back,” Meekhof told re­porters last week.

The new plan is backed by the Coali­tion Pro­tect­ing Auto No­fault, which has pub­lished re­cent re­ports al­leg­ing auto in­sur­ers are charg­ing Michi­gan women more than men with iden­ti­cal driv­ing records, and charg­ing work­ing-class res­i­dents more than white-col­lar peers.

“It’s wrong,” said Rep. Sherry Gay-Dagnogo, whose bill would pro­hibit in­sur­ers from us­ing fac­tors like gen­der, zip codes and ed­u­ca­tion lev­els to set rates. “I’m not say­ing women are bet­ter driv­ers than oth­ers, I’m just say­ing it’s not fair to charge us more.”

The pack­age would set re­im­burse­ment fees at 185 per­cent of work­ers com­pen­sa­tion for med­i­cal providers that treat in­jured mo­torists, but it would ex­empt Level 1 trauma fa­cil­i­ties at some of the state’s larger hos­pi­tals, such as Beau­mont in Royal Oak and Henry Ford in Detroit. It would also es­tab­lish new lim­its on home at­ten­dant care for crash vic­tims.

The pro­posal calls for a new au­thor­ity to fight fraud com­mit­ted by both claimants and in­sur­ance com­pa­nies, said Rep. Joe Graves, R-Ar­gen­tine Town­ship. It would also force trans­parency by ap­ply­ing the state Free­dom of In­for­ma­tion Act to the Michi­gan Cat­a­strophic Claims As­so­ci­a­tion, which cur­rently charges mo­torists $170 a year to re­im­burse in­sur­ers for large claims.

Leonard is not back­ing the new pro­posal but wel­comed the fo­cus on the is­sue.

“Speaker Leonard has been say­ing for years the price of ad­mis­sion is to come to the ta­ble with an ac­tual plan, and for years CPAN has re­fused to do so,” said House GOP spokesman Gideon D’As­san­dro. “They are fi­nally changing tac­tics, and I think that speaks to how much progress we’ve been able to make in the House and how close we are to get­ting some­thing done.”

House In­sur­ance Com­mit­tee Chair­woman Lana Theis, RBrighton, also wel­comed the plan and said she thinks fraud, a lack of ac­count­abil­ity for med­i­cal provider charges and a lack of cov­er­age op­tions for mo­torists have driven up costs.

But “many of the el­e­ments of the plan out­lined ear­lier to­day will not re­duce the cost of auto in­sur­ance, and in fact will likely make mat­ters worse,” Theis said in a state­ment.

In the Se­nate, Meekhof con­tin­ues to push a plan ad­vanced late last year that would have cre­ated a fraud au­thor­ity, limited paid “at­ten­dant care” hours for fam­ily mem­bers of auto ac­ci­dent vic­tims and capped ben­e­fits in as­signed claims cases in­volv­ing unin­sured mo­torists or pedes­tri­ans.

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