The Auto No-Fault Bill: A Disaster For Michigan’s Economy

The great debate currently taking place in Lansing regarding the future of the Michigan auto no-fault insurance law has primarily focused on the specific legal changes that this law will enact. For example, the elimination of lifetime full medical coverage; the significant limitation of in-home attendant care for homebound patients; the drastic limitation in medical coverage for motorcyclists involved in motor vehicle accidents; the imposition of governmental price control fee schedules; the lack of choice for many citizens, including non-motorists and workers who drive employer vehicles; and the likelihood of higher insurance premiums for many citizens. Although these issues create a powerful case why this Bill should be resoundingly defeated, they only tell a part of the story. It is not only the content of HB 4936 that is contrary to the public interest; so too are the numerous adverse economic and social consequences this Bill will have for the state of Michigan if is adopted. In short, this Bill will be a disaster for Michigan’s economy for a number of reasons, including the following:

(1) Increased taxes. The elimination of lifetime coverage for all reasonable charges for reasonably necessary product and services will result in a very substantial amount of unpaid medical expenses incurred by catastrophically injured auto accident victims. In this regard, last year, the Michigan Catastrophic Claims Association (MCCA) incurred approximately $8,000,000 in catastrophic claim expense costs. The loss of no-fault auto insurance funding for these expenses will mean a massive cost shift from no-fault to Medicaid and Medicare, thus increasing the State and Federal tax burden for Michigan citizens. In fact, in a recent study done by Public Sector Consultants, it was estimated that Michigan would suffer a $30 million loss if this kind of auto no-fault reform was enacted.

(2) Loss of jobs. The underfunding of medical treatment for severely injured accident victims will result in thousands of lost jobs in that sector of Michigan’s medical care industry that services those patients. In fact, the Anderson Group recently conducted a study that predicted that Michigan could lose somewhere in the vicinity of 5,000 jobs if the auto no-fault bill were passed.

(3) Increased risk of financial ruin for Michigan families. Michigan citizens who cannot afford the optional higher PIP benefit coverage limits could be financially destroyed if a catastrophic injury results in medical expenses in excess of the coverage selected. This is particularly true of motorcyclists who will never have more than $250,000 of medical coverage for severe injuries suffered in motorcycle-motor vehicle accidents.

(4) Increased health insurance costs. Because health insurance will need to pay many expenses currently paid by auto no-fault insurance, a significant cost shift from auto no-fault to health insurance will occur, thereby increasing health insurance costs for Michigan families and small business owners who provide health insurance to employees.

(5) Increased premiums for liability coverage. Most Michigan drivers will be forced to buy more liability insurance coverage, because all citizens will now have personal financial liability for any unfunded medical expenses suffered by the victim of an at-fault accident.

(6) Increased litigation. Victims incurring medical expenses in excess of their selected PIP coverages will be forced to sue at-fault drivers to recover the unpaid costs, thereby unnecessarily increasing litigation and the burden on the Michigan court system at all levels.

In short, HB 4936 is a bad Bill. It is bad for drivers; it is bad for workers; it is bad for taxpayers; and it is bad for Michigan.

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