Detroit Mayor Mike Duggan is muddying the already soiled waters of Michigan’s 2019 auto insurance coverage reform regulation by demanding a change that isn’t real looking.
As advocates of catastrophically injured motorists descended on the Capitol this previous week to protest the 2019 regulation’s price-fixing measures which will hinder their entry to care, Duggan sought to resurrect the problem of banning geography-based auto insurance coverage charges that critics argue is a type of redlining.
Detroiters have traditionally paid significantly extra for a similar actual automobile insurance coverage protection as suburban residents primarily based on claims knowledge for car accidents.
Duggan desires to tie a ban on utilizing geography to set automobile insurance coverage charges to halting the upcoming 45 p.c cuts for medical suppliers who deal with injured drivers.
“Geographically, Detroiters are nonetheless being charged extra,” Duggan conceded Tuesday throughout a information convention on an unrelated matter with Gov. Gretchen Whitmer in East Lansing. “And as I’ve mentioned to [advocates of injured drivers], earlier than you begin making adjustments to lift the charges, let’s get all people’s charges degree, and I’d absolutely assist what they’re proposing, if it is coupled with a provision that everyone in Michigan pays the identical geographic price.”
Duggan tossed out this concept when requested in regards to the fast-approaching July 2 implementation of value controls on sure medical providers for critically injured drivers that was scribbled into the invoice hours earlier than the Legislature handed it on the Friday earlier than Memorial Day in 2019. Spreading debate to geographic pricing would far overcomplicate the method of fixing the issue at hand.
Duggan — one of many savviest minds in Michigan politics — should know the concept of “leveling” auto insurance coverage charges by successfully making suburban and rural residents pay extra so Detroiters pay much less is rarely, ever going to fly within the present GOP-controlled Legislature.
There can be a bipartisan voter revolt within the suburbs if motorists needed to pay greater charges so Detroiters may get aid on insurance coverage prices.
The brand new regulation barred insurers from setting auto insurance coverage premiums by ZIP code.
However the regulation did not ban territorial rankings fully. Some insurance coverage corporations have merely merged a few ZIP codes collectively to get across the ban — a loophole a few of Duggan’s fellow Democrats warned can be exploited by insurers.
Quick ahead to an election 12 months, the mayor is aware of the brand new regulation will not be the panacea he hoped. For some Detroiters, it has not but produced important financial savings to insure a car inside Detroit’s 137 sq. miles.
A 2019 examine by The Zebra automobile insurance coverage value comparability web site discovered the price of insuring a 30-year-old male driver and a 2014 Honda Accord EX in Detroit rang in at $5,464.
The Zebra’s most up-to-date examine discovered the price of insuring a 30-year-old male driving a 2016 Honda Accord EX hovered round $5,072 — nonetheless virtually twice the statewide common and a paltry 7 p.c lower for the reason that new regulation kicked in.
“I do not assume it is proper to be elevating charges on Detroiters once they’re nonetheless greater than the remainder of the state,” Duggan mentioned.
Whereas the mayor is highlighting a professional and longtime grievance for Detroiters, he is also repeating the insurance coverage business’s speaking level that guaranteeing drivers injured earlier than 2019 get entry to the identical degree of care as they’ve had for years will someway trigger premiums to soar for present motorists.
The 2 do not should be instantly related.
The 2019 regulation’s promised shopper financial savings already kicked in July 2020 when motorists had been allowed to drop limitless medical insurance coverage for decrease charges on the Private Harm Safety portion of their insurance coverage.
For 11 months, motorists have been allowed to drop limitless PIP protection and elect to drive with $500,000 of protection, $250,000 of protection or no PIP in any respect if their common medical insurance plans or Medicare covers auto accidents. The $500,000 and $250,000 PIP protection plans got here with a mean discount within the simply the PIP portion of a driver’s premiums of 35 p.c and 20 p.c, respectively.
That is Mike Duggan’s “driver’s selection” regulation.
However the 45 p.c lower in supplier charges for residence well being care corporations, mind and spinal wire damage rehabilitation care not coated by Medicare will possible hit Detroiters injured in automobile accidents years in the past. The brand new regulation additionally caps member of the family paid residence care at 56 hours per week.
Advocates for some 18,000 catastrophically injured motorists are feverishly attempting to get GOP legislative leaders to rethink the price-fixing measures that suppliers say will drive them out of enterprise.
Motorists injured earlier than 2019 who get their care paid for by the Michigan Catastrophic Claims Affiliation are in limbo not due to the obligatory price reductions which have already kicked in, however due to the obligatory price reductions the regulation generously awards auto insurance coverage corporations.
The MCCA is a $23 billion belief fund for injured motorists that covers medical payments above $580,000 for the rest of their lives. The MCCA is funded by a line merchandise separate of PIP and different prices within the month-to-month premiums of every insured car within the state.
Making certain beforehand injured motorists get every day in-home expert nursing or speech and bodily therapies paid out of the MCCA belief fund will not be instantly tied to present or future PIP premiums.
The architects of Michigan’s no-fault insurance coverage regulation particularly walled off these prices 4 a long time in the past as a method of pooling bills for the most costly automobile accidents separate out of your typical fender-bender seat belt whiplash damage.
Opposite to what Duggan is saying publicly, the Legislature may move a regulation that claims any driver injured earlier than 2019 is to be grandfathered in with no cap on medical reimbursements and insurers nonetheless should honor final 12 months’s price reductions.
“They’re appearing just like the insurers can simply dictate the whole lot — they usually have,” mentioned Steve Sinas, a private damage lawyer on the Sinas Dramis Legislation Agency in Lansing.
If a compromise on supplier charges for residence well being care corporations and rehab facilities might be reached that was much less draconian than a forty five p.c haircut, then the MCCA would nonetheless be reaping important financial savings when coupled with the brand new regulation’s cap on hospital and outpatient suppliers charges at 200 p.c of what Medicare pays them.
Once more, there’s $23 billion within the fund that is alleged to pay for the care of those injured drivers.
Duggan’s try and toss the anvil of territorial pricing across the neck of catastrophically injured motorists is precisely why so many previous efforts to reform Michigan’s auto insurance coverage regulation didn’t make it to a governor’s desk: The politicians go huge, then go residence with out something achieved.