Late last week, House Speaker Jase Bolger
(R-Marshall) outlined an auto insurance overhaul that would provide 10 percent
yearly savings in premiums for two years, a $10 million cap on catastrophic
medical benefits, and more transparency within the Michigan Catastrophic Claims
Association (MCCA). HB
4612 failed to pass the House last year with a $1 million benefit cap and
rate relief of $125 per vehicle for one year. Speaker Bolger insists that he
has addressed all of the opposition’s complaints about the previous proposal,
though he still expects pushback, saying opponents will find “new excuses” to
oppose the bill. The proposed $10 million cap would be 200 times higher than the
next highest state, according to Mr. Bolger, but many House Republicans are
opposed to any cap on catastrophic benefits. Without Republican support the
bill is well short of the 56 votes needed for passage.
Speaker Bolger said the proposed cap would not
affect 99.9% of people injured. He also argued that, with efficiencies provided
for in the proposal, the cap wouldn’t affect anyone. The efficiencies Speaker
Bolger said would save money in the system include guaranteeing payments of 125
percent of worker’s compensation rates if companies pay the claim within 30
days. Mr. Bolger said auto insurance companies will still pay the highest rates
at 125 percent.
In addition to the 10 percent savings on
premiums for two years, the proposal would create a $25 per-policy charge to
eliminate the shortfall from the Health Insurance Claims Assessment (HICA),
which raises money for Medicaid. Mr. Bolger said the proposal would save
Michiganders $1.5 billion during the two years the rate rollback is guaranteed.
A low-cost auto insurance policy also would be created under the proposal for
those at or below 133 percent of the poverty line. The low-cost plan would
provide a $50,000 limit and would not cover other individuals involved in a car
accident.
Mr. Bolger also asserted that he would like
to “beef up” enforcement for those who drive uninsured. He said he wanted to
propose relief, citing the cyclical factors that keep individuals from being
able to afford auto-insurance. He said he is in support of allowing an individual
to purchase auto insurance rather than pay fines for driving uninsured.
The proposal would also require the MCCA to
post financial data online and operate under requirements similar to the Open
Meetings Act and Freedom of Information Act. The MCCA would also directly cover
claims from providers instead of the current system where providers bill
insurers, who then have to seek reimbursement from the MCCA.
Also included is a fraud authority to investigate and prosecute abuse in the
system. The proposal would also continue coverage for “reasonably necessary”
treatment, whereas the bill on the House floor included language for “medically
necessary treatment. Speaker Bolger’s proposal also would establish what he
called reasonable rates for attendant care while still allowing for
around-the-clock care.