Misguided insurance law will cost families [Michigan Chronicle (MI)]

Last week, the Detroit Democratic Caucus announced its united opposition to HB 4612. It is an insurance industry-backed measure forwarded by the governor which eviscerates the life-saving health care coverage currently provided under Michigan's no-fault law, without addressing the unaffordable premiums motorists in the state's urban areas are forced to pay.

Detroit's average premium of $5,072 is the nation's most expensive, and is $1,200 higher than second-place Philadelphia. And the unfortunate reality is that more often than not, a car insurance premium in Detroit is higher than the value of the car.

Making no-fault insurance premiums more affordable throughout Michigan, but particularly in urban Michigan, must be a vital component in Michigan's economic revival, but this is not what HB 4612 does.

HB 4612 places a $1 million cap on care for the victims of auto accidents, limits rehabilitation to 52 weeks, places severe restrictions on attendant care, places unfair burdens on health care providers and keeps the Michigan Catastrophic Claims Association's (MCCA) books and records secret.

This misguided legislation would simply shift the cost of health care from the no-fault system to the Medicaid system and the pocketbook of Michigan's families, so that insurance company profits can continue to skyrocket

This same approach was taken in Colorado where it backfired, leaving taxpayers on the hook for a 205 percent increase in the Medicaid budget It is estimated that HB 4612 would cost Michiganians $4 billion over the next 15 years.

At the same time, because the fine print in the bill shifts other costs to hospitals, Michigan health care providers would lose a combined $180 million.

According to an Anderson Economic Group study, that would mean a loss of 10,000 jobs in the state's health care industry, the fastest growing industry in the state.

The Detroit Medical Center, Detroit's top employer, has a higher volume of Medicaid and Medicare patients and would take a severe economic blow.

Medical bills for catastrophic injuries can stack up in a hurry. In many cases, catastrophically injured victims' bills are over $1 million within the first few months following the accident and some would hit that amount before even being discharged from the hospital.

Michigan's present no-fault law benefit standards ensure that the injured are taken care of, giving families the ability to avoid financial ruin resulting from medical bills. A Harvard Medical School study found that bills from un-covered health care expenses are the leading cause of family bankruptcies in the United States.

In testimony before the Ho'use Insurance Committee, insurers refused to certify that imposing such a cap would result in any premium savings while insurance companies pocket billions.

Furthermore, the bill itself only guarantees an artificial savings until January 1, 2015, after which insurance companies are free to once again increase premiums.

There are a number of common-sense solutions that can and should be implemented without tearing away life-saving health care coverage.

The first step in bringing auto insurance rates down is getting a handle on how rates are set The MCCA, a fund that pays for auto injury costs that exceed $500,000, charges $175 per year to every policy in the state.

In July of this year that amount will go up to $183. The MCCA, which has $24 billion in assets, is funded entirely by Michigan drivers and was created by state law, but it is governed by a board of insurance company executives. The MCCA is fighting to shield its books and records from public review under the Freedom of Information Act and Open Meetings Act.

There is an ongoing lawsuit to open the MCCA to public scrutiny so that drivers can see if the fund is being properly managed.

Without MCCA transparency, it is impossible for any good faith discussion on auto no-fault reform to proceed. No data, no deal.

Besides transparency, other, better solutions that would actually help to lower rates now should include:

* Closing a loophole in the law that prevents consumer refunds even when insurance company is found to be overcharging;

* Prohibiting the use of credit scoring in setting rates. Presently, a driver with a DUI and a good credit score gets a better rate than a laid-off factory worker with a challenged credit score who has never had a ticket

* Having companies obtain prior approval from the insurance commissioner before issuing rate hikes.

* Preventing insurers from raising the policyholder's premium if he/she is not at fault for an accident Otherwise, what is the point of having insurance?

Then there is the elephant in the room: comprehensive and collision coverage. The truth is that the Governor and Republican-led state Legislature is focusing on the wrong thing.

Liability makes up about one third of the premium, while comprehensive and collision make up 60 percent of the premium.

The Michigan Legislative Black Caucus believes that we need to go fishing where the big fish are.

Evidence from other states suggests that very significant premium savings for consumers could be realized by dealing squarely with huge mark-ups for collision repair, steering to certain repair shops by insurers, and the lack of standards and oversight for repair shops.

We have a quality auto insurance system. We should improve it by making premiums more affordable, protecting health care coverage and strengthening oversight of insurance company and car repair practices.

Thomas Stallworth is a Michigan state representative from Detroit.