Wednesday, March 19, 2014

Objections to the Radical Changes to Michigan's No-Fault Insurance Law

In most states, when an auto accident occurs, it is important to identify who was at fault for the accident. Typically, the person at fault (and their car insurance company) will be responsible for paying any damages that occurred due to the accident. The reasoning is that you should not be stuck paying for potential lifelong medical bills or a new car when you did nothing wrong. Additionally, sometimes charges need to be filed against the person who caused the accident. However, the result of finding out who is at fault typically leads to a bunch of time investigating or going to court - as each car insurance company wants the other person to be found to be at fault so that they do not have to pay. This can get expensive quickly.
In order to attempt to bring down these costs, and therefore the cost of car insurance in general, many states have put into place "no-fault" insurance laws. Michigan is one of 16 states that have one of these no-fault laws, but that law may soon be changing. Although many people in Michigan support at least some type of change to this law, there are some people who are fighting the current proposition for many reasons that they state are against the best interest of the public.
Supposedly, the main benefit of no-fault insurance laws is the cost savings passed to drivers. Massachusetts was the first state to introduce a no-fault insurance law, and 15 states have since enacted similar laws. The idea of this law is that by removing the costs involved in fighting the causes of an accident, insurance companies will lower their prices. Opponents state that if you look at the numbers, you will see that insurance prices have not gone down, and Michigan insurance prices are actually close to 40% higher than neighboring states. Specifically, the cost of personal injury protection in Michigan has increased more than 9 times when comparing it too other no-fault states. These costs have led approximately 20% of Michigan drivers to (illegally) drive without insurance, which is dangerous for everybody.
Expense, as well as unlimited lifetime medical benefits, are two of the reasons why government officials are trying hard to change this law. Several executives of Wayne, Oakland, and Macomb counties, as well as the mayor of Detroit recently met to speak about their opposition to these changes. They argue that the bill that is being proposed as a replacement is a "compromise" and a "death sentence for people recovering from catastrophic injuries." These four executives state the following components of the bill as reasons for their objection:
  • Capping the long-term care of people suffering from auto accident injuries - this can lead to many people not able to afford their medical care.
  • Limiting care by family members at home - is unfair since family members have been proven to provide better care than strangers hired to do the job.
  • Opt out of providing lifelong, palliative care that is given to provide a reasonable quality of life. Again, people will be unable to afford care and their quality of life will be dramatically reduced.
  • Putting a limit on home care hours of 24 hours a day - this will mean that people who are injured will be unable to hire more than one home aide per shift, even if a doctor determines multiple aides are necessary.
  • Implementing a lifetime limit on physical therapy to 52 weeks, and only providing additional therapy if it is medically proven that the person can make additional progress.
  • Only allowing Michigan residents to submit claims - friends and family from out of state who are passengers in your vehicle, or who you lend your car to for a quick trip to the store, will not be covered.
Currently, this bill has been put on hold due to debates over "Obamacare", the Medicaid expansion, and the federal government shutdown. However, it should come back to the table over the next few months.