CPAN Applauds New Report From U of M Poverty Solutions Calling on Legislators to Revisit Auto Insurance Reform
CPAN Applauds New Report From U of M Poverty Solutions Calling on Legislators to Revisit Auto Insurance Reform
Report highlights crisis caused by 45% cut to catastrophic care and continued discrimination by auto insurance companies
LANSING, Mich.—(Dec. 8, 2021)—CPAN, the consumer protection organization fighting for fairer auto insurance laws, today applauded a new report from the University of Michigan’s Poverty Solutions initiative which calls on the Michigan Legislature to revisit the devastating 45% cut in care to catastrophic crash victims.
The report also concluded that Michigan’s 2019 auto insurance reform “did nothing to reduce discriminatory pricing by race,” and encouraged policymakers to enact further restrictions on auto insurance companies to limit discrimination against non-white and low-income consumers.
“The Michigan Legislature has work to do,” said Devin Hutchings, CPAN president. “The 2019 auto reform package ripped care away from vulnerable crash survivors who were contractually guaranteed lifetime care through the premiums they faithfully paid. And it’s clear that the major savings promised by state leaders have failed to materialize, due in large part to continued discrimination by auto insurance companies—especially in Detroit. With only a few days of session left this year, the Legislature should fix these issues immediately before more unnecessary suffering occurs.”
The report, titled “Building on Michigan’s Auto Insurance Reform Law,” recommends that lawmakers revisit reimbursement rates for services not on the Medicare schedule, and use dollars from the Michigan Catastrophic Claims Association (MCCA) fund to support long-term care.
The 45% cut in reimbursements for non-Medicare services—including residential rehabilitation programs, in-home care, outpatient therapy and much more—has forced post-acute care providers out of business and others to no longer accept patients covered by auto insurance, causing a growing crisis for crash victims and their families throughout the state.
The report stated that “the method used to cap medical fees may be unnecessarily stringent and out of line with national peers, causing a crisis in access to care for victims of catastrophic accidents that occurred prior to reform,” adding that “lawmakers should seek to utilize the surplus in the Catastrophic Claims Fund to restructure how that fund is used to support long-term care facilities.”
“Those MCCA funds were set aside to care for crash survivors,” Hutchings said. “Any surplus dollars should be used to ensure that current victims—as well as anyone injured in the future—continue to receive the care they need.”
The report concludes that Michigan should look to other states that have taken a more “nuanced” approach to a medical fee schedule and recommends that insurance companies be required to “give a certain weight to three mandatory, driving-related factors in calculating their rates: driving record, annual miles driven, and years of driving experience.”
Douglas Heller, a national insurance expert and consultant to the Consumer Federation of America and CPAN, said that while the report correctly addressed shortcomings of the new law, he disagreed with its recommendation that even lower Personal Injury Protection (PIP) levels be offered, noting that in other states, low-coverage PIP is largely ineffective. Heller also said the report did not do enough to highlight state government’s failure to protect consumers.
“The report makes some important recommendations, especially to fix the law’s devastating impact on the post-acute care system in Michigan and the need to address persistent racial discrimination,” he said. “However, it does not thoroughly address the weakness of Michigan’s Department of Insurance and Financial Services (DIFS) and the responsibility of the insurance industry for the ongoing high rates and damaged care structure.”
###
CPAN is a broad bi-partisan, Michigan based coalition, whose mission is to be the consumer advocate for auto insurance policyholders, those who have been injured in a motor vehicle crash and the medical providers caring for them, representing them at the Capitol, in the courts, and in the public forum. For more information, please visit www.CPAN.us.