SB 1014 (H-1)
10 Reasons to Just Say “NO”
On November 3, 2017, the Michigan House of Representatives rejected HB 5013, which would have allowed insurance companies to sell substandard auto no-fault insurance policies to Michigan families with woefully inadequate caps on medical care and income loss benefits for auto accident injuries. Now, SB 1014 (H-1) seeks to authorize the sale of very similar substandard, capped no-fault insurance policies. Contrary to some characterizations, the first capped option under the SB 1014 (H-1) is not a $250,000 cap. Rather, it is a $25,000 lifetime cap with a narrow exception for $225,000 in emergency medical care. The second capped option is a $250,000 cap, with no distinction between emergency medical care and non-emergency care. The third capped option is a $500,000 cap, with no distinction between emergency medical care and non-emergency care. Importantly, these three capped options apply not only to medical expenses, but to all PIP benefits, including benefits for income loss and household services. These inadequate benefit caps are applicable to all family members in a household who are covered by the policy. Moreover, the bill authorizes the sale of these substandard no-fault policies with no true guarantee of insurance premium reductions. The bill also provides many loopholes for insurance companies to avoid charging fair insurance rates to Michigan consumers. For the same reasons that HB 5013 was rejected as horrible policy for Michigan, SB 1014(H-1) must also be rejected. The following provides at least 10 compelling reasons to just say“NO” to this bill.
1. Every Child Can be Left Behind – Under current law, every Michigan child is entitled to lifetime medical coverage for auto accident injuries. Under the bill, every child loses this existing right to lifetime medical coverage forauto accident injuries, if the child’s parent does not buy or cannot afford to buylifetime coverage and instead buys a capped no-fault policy. Children in those households will not have the lifetime medical and rehabilitation coverage that is essential for a child dealing with the lifelong consequences of catastrophic injury.
2. Bad Choices for Senior Citizens – The bill purports to give senior citizens a choice to save premium dollars by entirely opting out of no-fault PIP coverage. In reality, this is a bad choice for Michigan seniors. Seniors are not given the choice to retain the part of no-fault coverage that makes it possible for them to stay in their home if they sustain severe, disabling injuries in an auto accident. The bill provides an “all-or-nothing” choice for seniors with no specific, substantial, and guaranteed premium reduction for making such a bad choice. A truly fair senior citizen opt-out is one that allows seniors to opt-out of no-fault coverage to the extent medical expenses are covered by other health plans, while retaining no-fault coverage for those expenses that are not.
3. Reprehensible Protections for Drunk and Careless Drivers – Those irresponsible drivers who cause victims to incur medical expenses beyond a capped no-fault PIP policy will be immune and have absolutely no liability for compensating the victim for those uncovered medical expenses. This injustice does not exist under the current no-fault system because all accident victims have lifetime medical coverage and do not incur uncovered medical expenses.
4. Drastic Reduction of Family-Provided Attendant Care Benefits – Catastrophically injured patients will lose 50% of their right to family- provided attendant care benefits, which will now be limited to only 12 hours per day. For the remaining care, families will be required to hire strangers to care for them in their home.
5. Increased Risk for Patient Bankruptcy and Taxpayer Liability – Seriously injured persons with capped no-fault policies who incur substantial medical expenses in excess of that cap will likely face financial disaster because of these uncovered expenses. For many, this will mean bankruptcy. The auto accident related medical expenses that will no longer be covered will be shifted to Michigan taxpayers through increased financial burdens in the Medicaid system.
6. Inadequate Medical Fee Schedules Resulting in Cost Shifting – Under the bill, providers treating auto accident victims will be only compensated at rates payable under the Michigan Workers’ Compensation fee schedule. These substantially lower rates will cause a disincentive for the best medical providers to render care to auto accident victims and will cause the unreimbursed portion of medical care to be shifted to other health care payment systems, including employer-provided health insurance and other insurance plans.
7. Phony Protection from Unfair Rate-Making Practices – Although the bill purports to prohibit rate-making practices based upon gender, marital status, education, etc., it will allow those very same practices to be utilized if a no-fault insurer files group insurance rates. Various insurance companies are currently exploiting this loophole, which this bill does not close. Moreover, the bill does not prohibit the use of a person’s credit history, it only bars use of the “credit score” (the specific number assigned by the credit reporting agency). Because of this, insurers will still be allowed to use credit history, zip codes, and other data tracked by the credit scoring companies. This section offers only illusory protection from unfair rate-making practices.
8. Phony Premium Reductions – The bill purports to mandate a reduction in premiums. However, this premium reduction is illusory for two reasons: a) the premium reduction required by the bill applies only to the premium for PIP benefits, not to the total premium, which, in reality, is comprised of coverages that are frequently more costly than the premium for PIP benefits; and b) under the bill, no premium reduction is necessary if an insurance company is able to convince the Department of Insurance and Financial Services (DIFS) that the failure to reduce the premium is “justified” by “using generally accepted and reasonable actuarial techniques.”
9. Phony MCCA Transparency – Even though the bill requires an independent audit of the MCCA, it does not require the disclosure of the MCCA’s“rate-making data,” which is essential to determining the appropriateness of the MCCA annual assessment that is passed onto Michigan drivers.
10. Economic Disaster for the Michigan Health Care Economy – Michigan’s healthcare economy is robust and essential to the overall economic health of Michigan. This bill, which eliminates lifetime coverage for auto accident injuries and drastically reduces medical provider reimbursement rates, will significantly diminish revenue to that sector of Michigan’s economy, thereby precipitating a loss of jobs and an impairment of Michigan’s economic growth.
For more information about the legal implications of this Bill, please contact the CPAN Legal Team of George T. Sinas, Stephen H. Sinas, or Thomas G. Sinas, of the Sinas Dramis Law Firm in Lansing and Grand Rapids. Those telephone numbers are: Lansing Office at (517) 394-7500 and Grand Rapids Office at (616) 301-3333.