Oct. 19--The overhaul of the state's no-fault auto insurance system -- set to take effect in July 2020 -- will not result in cost spikes next year for the health insurance premiums of many Michiganders, particularly those whose employers already cover car crashes, according to health insurance companies.
"We are not anticipating an increase in our rates because of this change," said Marti Lolli, chief marketing officer for Grand Rapids-based health insurer Priority Health.
But how much the controversial overhaul will raise the cost of health insurance for Michigan employers with self-funded plans, some of which have traditionally not covered auto accidents, remains an open question.
Half of all Michigan residents get health insurance through an employer, and roughly 60% of them are with a self-funded employer, according to U.S. Census Bureau data and Michigan insurance experts.
The total number of self-funded employers that currently exclude auto accidents in their health insurance coverage is unknown.
"We haven't seen costs directly related to the new law affect premiums yet," said Jeff Romback, deputy director at the Michigan Association of Health Plans, an industry group. "But we also don't know the cost of car accidents are going to get passed through to plans. We're in wait, see and study mode."
Overall, the revamped no-fault law is expected to lower Michigan's highest-in-the-nation auto insurance rates, especially in urban areas, and also lower the cost of treating auto accident victims.
The law's cost-containment mechanisms, including Medicare-style price controls, are generally opposed by hospitals and specialized rehabilitation centers, which stand to lose millions in annual revenue. No-fault has traditionally paid medical providers more money than all other types of insurance.
There was widespread speculation earlier this year that the no-fault overhaul, signed into law May 30 by Gov. Gretchen Whitmer, could still drive up health insurance costs for employers because of cost shifting and more medical bills from car accidents falling to health insurance rather than auto insurance.
For instance, Medicaid costs are projected to grow $72 million over 10 years as a result of the cost shift.
However, health insurance industry representatives say that so far, they are seeing none or only minimal no-fault-related cost increases to health insurance premiums for 2020.
That is because health insurance covers fewer post-acute services, keeps a tighter lid on medical charges and typically features higher deductibles. Deductibles are amounts that patients must spend out-of-pocket before their insurance kicks in, which is an incentive to shop around for lower-priced care or simply skip it to save money.
In addition, those who become catastrophically injured in a car crash and are unable to return to work would eventually lose their employer-sponsored health insurance -- limiting the employer's exposure to the person's future insurance claims.
"It is minimal impact because of how (health) insurance works," said Lolli of Priority Health.
Starting July 1, Michigan drivers get a first-ever choice in the amount of medical benefits that they buy with auto insurance. The current no-fault system requires all drivers to buy potentially unlimited, lifetime medical benefits. Michigan has been the only state with such a requirement.
People who pick lower levels of no-fault coverage will need to rely more on their health insurance after a bad accident.
Because of no-fault's unlimited benefits, some health insurance plans in Michigan have traditionally not covered auto accidents.
"There are a significant number of organizations that figured out 'I can reduce my employer-sponsored health care costs (by not covering auto), and then I have another 1% or something that I could put into wages,' " said Laura Appel, senior vice president at the Michigan Health & Hospital Association.
There is no estimate yet on the number of employers that might start covering auto accidents under health insurance in time for the new no-fault system.
Even though many employers are set to renew their health insurance plans Jan. 1, they could still make midyear adjustments to add auto accident coverage as the July 1 no-fault date draws closer, said Mike Embry, president of Southfield-based insurance agency Comprehensive Benefits.
"I think it's still up in the air as far as what employers will do," Embry said.
Quicken to cover auto
One self-funded business that says it will start covering auto accidents is Detroit-based mortgage lender Quicken Loans, whose founder and chairman, Dan Gilbert, advocated for changes to Michigan's no-fault system.
The mortgage lender says it will add auto accidents to its health insurance in time for the summer start of the new law.
"Quicken Loans is committed to offering health coverage for automotive accidents through its employer-provided insurance plans, so our team members can realize the significant savings available under Michigan's new auto insurance law," Aaron Emerson, senior vice president of communications, said in an email.
It is still too early for Quicken Loans to know the cost of that expanded coverage.
"Since state regulators and health insurance carriers are still working through the details of the new coverage system, we have not yet received the necessary information for coverage policies and pricing," Emerson said.
Blue Cross Blue Shield of Michigan, the state's largest health insurer, says that because most of the commercial policies it sells are already first in line ahead of no-fault insurance to pay auto accident medical bills, the new law "shouldn't have a meaningful impact to our premiums."
Motorists with health insurance that does cover auto accidents have long had the option to "coordinate" their no-fault policy to get a lower auto insurance rate.
Starting in January, all of Priority Health's health insurance plans sold to individuals will be the primary payer for auto accident medical bills, before no-fault. That is a change from the past, when some of the insurer's plans didn't cover auto. Even with this added coverage, the average price of a Priority Health individual market plan for 2020 will not rise, according to filings with state regulators.
"We're not in the first year going to see any increases," Lolli said. "But I think the jury is still out as we get the data in and see what this looks like in two or three years."
Pick your PIP
Experts are encouraging drivers to learn the details of their health insurance so they can know which of the new no-fault coverage options they can sign up for.
Starting July 1, in general only Michigan drivers who are on Medicare or have commercial health insurance that covers car crashes (and with a per-person deductible no higher than $6,000) can choose to completely opt out of no-fault benefits -- in return for bigger savings on their auto rates.
Other drivers will be required to purchase some no-fault medical coverage, known as personal injury protection or PIP, with their auto insurance. They can pick from several options:
-- $250,000 in no-fault medical benefits.
-- $500,000 in no-fault medical benefits.
-- Unlimited no-fault medical benefits.
-- $50,000 in no-fault medical benefits -- but only for those on Medicaid or with health insurance that covers auto.
Motorists that pick a limited benefits option, only to later exhaust those benefits following a bad crash with lots of medical bills, can still fall back on their health insurance or Medicare or Medicaid.
Health insurance will cover those patients' hospital bills. It also will cover rehabilitation care. But the coverage won't be as comprehensive as no-fault insurance.
No attendant care
Neither commercial health insurance nor Medicare or Medicaid will cover all the various post-acute services that no-fault offers, such as extensive in-home attendant care, door-to-door medical appointment transportation, lost wages replacement, home and vehicle modifications, long-term cognitive and speech therapy and "custodial care" in some residential rehabilitation centers.
Most commercial health insurance plans also limit the number of physical therapy and rehabilitation visits, typically between 30 to 90 visits per patient per year in Michigan. No-fault insurance doesn't have such limits.
One reason why some health insurers aren't hiking premiums in 2020 specifically for the new no-fault law is because they cover fewer post-acute services than no-fault.
"What is covered today will not be covered under any (health insurance) plan in the future, in its entirety," said Lolli of Priority Health.
Appel of the Michigan Health & Hospital Association said that consumers should try to make thoughtful decisions next summer when choosing medical benefits levels for their auto insurance.
Few people anticipate getting into a serious accident that requires months or even years of rehabilitation and time off work.
"What benefits does your health insurance cover, compared to what services are you going to need if you are ever in a catastrophic accident," Appel said. "Two hundred and fifty thousand dollars sounds like a lot of money until you think 'what does it cost annually to pay for nursing home services,' and what if you needed that for 10 years or 20 years. That is not going to last."
Employers that have self-funded health insurance, also known as being self-insured, are often large organizations such as General Motors, Ford and Fiat Chrysler that pay medical claims on their own and use third-party administrators to process the claims.
Traditionally in Michigan, some of these self-funded plans have not covered auto accidents. Other plans do not explicitly exclude auto accidents, but require any other available insurances such as no-fault to pay medical bills first.
Kim Clark, a senior vice president at Marsh & McLennan Agency, said that many of her self-funded employer clients are choosing to remain secondary payers for auto accidents in 2020, which means that their health insurance plans only kick in when the no-fault benefits in an employee's auto insurance policy run out.
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