A perception has been cast that there is a need to change Michigan's Auto No-fault insurance system despite the fact that citizens of this great state have already voted twice to maintain the country's best coverage for auto accident victims. Recently, Governor Snyder has stated that it is one of his priorities to change the current auto no-fault law citing that the current system is not sustainable. Even more recently, Michigan’s Insurance Commissioner, Kevin Clinton, stated that he would like to do away with the Michigan Catastrophic Claims Association (MCCA) claiming that “there are a lot of abuses, a lot of fraud." As the Executive of Oakland County, I can tell you that these statements and associated efforts to dismantle Michigan’s auto no-fault law are inflammatory and lack factual evidence. What’s more, changing our current auto no-fault system and/or the dismantling of the MCCA will be extremely harmful to our economy, the hospital system in the State of Michigan and the injured survivors left with catastrophic injuries. To date, no independent data has been shown to demonstrate that this effort represents anything more than cutting costs of the insurance industry while shifting the cost of caring for accident victims to State funding insurance. Changing the current law will destroy jobs, severely harm Michigan’s Hospital Systems and shift cost from private paid insurance to State funded Medicaid.
Let’s talk about the facts. Michigan’s Auto No-Fault Law:
- Is paid for by drivers for the protection of drivers
- Provides restored quality of life to accident victims
- Limits costly Tort lawsuits and court docket volume
- Has been overwhelmingly supported by Michigan voters on multiple occasions
- Provides the best possible care for people injured in an auto accident
- Is responsible for at least 10,000 jobs in Oakland County alone that are directly or indirectly tied to caring for people with catastrophic auto injuries
The truth is, the system is working as it was originally intended and any attempt to change the current law without having independent third party financial information is reckless and would result in damage to Michigan’s economy, shift millions of dollars of cost from private insurance to Medicaid and destroy the livelihood of Michigan’s catastrophically injured auto accident victims.
The auto insurance industry and legislators who are proposing changes to the current law have continued to modify their talking points over the past 18 months while the Michigan Hospital Association (MHA), the Coalition Protecting Auto No-Fault (CPAN), the Brain Injury Association of Michigan (BIAMI) and the citizens of Michigan have continued to seek transparency and truth. Presented evidence clearly shows that there are legitimate concerns and complaints about the management and financial transparency of the MCCA fund as demonstrated by a recent court decision demanding that the MCCA provide transparent validation of its actuarial assumptions that are used to define risk and estimate future cost. While the MCCA claims that their financial assets are audited and reported annually, the truth is that the assumptions used by the MCCA for the actuarial variables that go into their equation for defining risk and future cost are not audited. These actuarial assumptions are kept secret by the MCCA despite the fact that the funds held by the MCCA legally belong to the insured drivers of the State of Michigan. If these assumptions are overstated, then it is a reasonable concern by the insured drivers in the State of Michigan (the legal owners of the fund) that transparency be embraced and the assumptions for the actuarial variables be independently audited. Governor Snyder, who is a CPA and a “numbers guy” should understand and endorse this issue. The truth is that a full audit of the MCCA and their actuarial assumptions will either define the financial health of the MCCA fund or identify the root cause of the Fund’s unsustainability claimed by the insurance industry.
Auto insurance providers also claim that they pay more for medical services than other providers such as Blue Cross and Medicare and further claim that they should pay the same rate. Some simple facts are that Blue Cross and Medicaid represent a larger scale of business to the medical industry than auto insurance. Also, Blue Cross and Medicare provide preapproval for medical services, allow for electronic medical billing and provide payment within several days by direct deposit. This gives the medical providers’ confidence that they will be paid in a timely manner and reduces the cost of doing business.
By comparison, auto insurance companies do not provide preapproval for medical services, do not allow for electronic medical billing and often refuse to pay their bills and/or force the medical provider to retain legal representation in order to get their invoices paid. This causes great uncertainty by the medical providers that they will be paid at all for legitimate medical services that have already been rendered and increases the cost of doing business.
This topic is analogous to people with different credit scores wanting the same interest rate from a bank. Blue Cross and Medicare have the equivalent of a great credit score and auto insurance has the equivalent of a poor or low credit score. It’s unrealistic to think that these different entities could (or should) qualify for the same rate when one has a history of paying their bills promptly and the other has a reputation for slow payment at best and no payment without legal intervention in many well documented cases.
In other states, individuals who are catastrophically injured and cannot afford the ongoing and extensive treatment care for their medical needs resulting from their injuries are cast aside and warehoused in state-funded nursing homes. Forced to live away from their loved ones, they are more likely to experience health problems, skin breakdown, and physical and emotional degeneration. Those that are fortunate enough to stay in their homes are either financially destroyed or often left unattended so their families can continue to work. Is this what we want for our citizens?
While many of our elected officials seem to embrace the idea that Michigan’s personal injury protection insurance only needs to be slightly better than other states, I believe that we need to first collect data that represents the truth and then (based on the presented data) define what the root cause of a problem is (if in fact a real problem exists). With the thousands of lives of Michigan’s catastrophically injured at stake, the resulting massive shift to Medicaid and the negative financial impact on our economy, private health insurance and the hospital systems, we simply cannot afford to get it wrong. If we really want to understand the driving force for insurance rates in Michigan, let’s discuss the cost of collision and comprehensive insurance as well as the role of credit scores in determining insurance rates.
Last but not least, this is a jobs issue. The medical and health professions are the #1 jobs creators and the #1 jobs sustainers in Oakland County and throughout Michigan. We have attracted the best and the brightest medical professionals to Michigan hospitals and research centers and, according to the United States military, Michigan is leading the way in research and therapy for traumatic brain injury. Making changes to our current auto no-fault system without any real and validated data that substantiates the existence of a real problem is reckless and jeopardizes the balance of our entire statewide health care system. Before any changes can be considered it is critical that we embrace complete transparency of all issues related to auto no-fault including the actuarial assumptions and variables used by the MCCA to calculate risk and future liability.
L. Brooks Patterson
Oakland County Executive