Michigan Senate passes auto insurance bills amid debate over limiting medical costs, premiums

A divided state Senate approved revisions Thursday to Michigan's auto insurance law that backers said would curtail costs in the only state to require unlimited medical benefits for those severely injured in crashes and that opponents warned would hurt patients.

The Republican-led chamber voted 21-17 mostly along party lines to move the legislation to the House after five hours of closed-door meetings and debate on the floor. Democrats unsuccessfully sought 17 amendments, including some that would have required auto insurers to cut premiums.

While the bills do not mandate reduced rates, insurers say they would drop to coincide with corresponding savings on health costs.

"The best approach to bringing down insurance rates in Michigan is to take costs out of the system," said the legislation's sponsor, Senate Insurance Committee Chairman Joe Hune. The Republican from Livingston County's Hamburg Township stressed that unlimited benefits would stay intact, unlike in bills introduced in 2013 and 2014.

Countered Sen. Coleman Young II, a Detroit Democrat: "It is unconscionable for this Legislature to be helping the insurers without helping the people first."

He said competition among insurers has not driven premiums downward and "won't under this bill."

The main bill would:

— Restrict auto insurance medical payments to the average of what commercial health insurers pay. Auto insurers complain that they're charged more by hospitals and doctors than health insurers are to make up for government-set Medicaid and Medicare rates, resulting in higher premiums for motorists.

— Create a new entity to replace the Michigan Catastrophic Claims Association, which is funded with a $186 annual per-vehicle fee assessed on drivers and covers severely injured motorists whose medical bills and rehabilitation costs exceed $530,000.

— Limit insurance reimbursement for in-home nursing care for people recovering from their injuries with maximum hourly rates and cumulative hours. Patients could go above the caps if authorized by a medical review.

— Establish an insurance authority to investigate fraud in the no-fault system.

Michigan mandates that drivers have unlimited personal injury protection covering medical expenses and lost wages. The MCCA's annual per-car assessment will drop to $150 starting this summer.

The 37-year-old nonprofit unincorporated association whose members are auto and motorcycle insurers paid out $1 billion in 2014 to care for roughly 15,000 injured motorists — mostly for brain and spinal cord injuries, multiple fractures, and back and neck injuries.

"The cost is just astronomically high, and unfortunately we are pricing people out of the market in our urban centers," said Sen. Virgil Smith, a Detroit Democrat who called the Senate vote a "huge first step."

He was the lone Democrat to support the measures, along with 20 Republicans. Seven Republicans joined 10 Democrats in opposing the bills.

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Online:

Senate Bills 248-249: http://1.usa.gov/1CPmp2J

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