Duggan, Leonard seek votes for auto insurance overhaul

  • Mike Duggan
  • 02/11/2017
Duggan, Leonard seek votes for auto insurance overhaul
Lansing Michigan House Speaker Tom Leonard and Detroit Mayor Mike Duggan were looking for votes Thursday night in hopes of advancing their bipartisan proposal to reform the states auto no-fault insurance system.

Duggan, a Democrat, was at the Capitol for the second straight day, lobbying members of his own party to support a plan that seeks to lower highest-in-the-nation auto insurance rates by allowing plans that cap currently unlimited lifetime medical benefits for injured motorists.

Leonard and House Republicans made several changes to the legislation Thursday ahead of a possible late-night vote, including a five-year sunset that would require the Legislature to revisit the law in 2023.

They would get a chance to review and reassess the bill, said House GOP spokesman Gideon DAssandro. This gives us five years to see the rates come down and see if the Legislature five years from now agrees that the changes were good.

Republicans also modified a proposed fee schedule for hospitals by increasing a proposed cap on reimbursement rates that hospitals that treat injured motorist could seek from auto insurers. The change moved at least one reluctant Republican to support the plan.

Ive been a no all along because I think we need to protect Michigan citizens, but I also think Michigan citizens have the right to be able to afford insurance, said Rep. Ed Canfield, R-Sebewaing. And at this point we know that 22 percent of people dont have insurance, or dont buy insurance.

Hospitals are making money with this product the way it is, he continued. Were also all good Republican people who believe that you should be able to charge what you wanna charge. I also believe that we have to be fair. And I believe that this schedule we brought out is fair and thats why Im saying Im supporting.

Leonard has repeatedly said he will need 10 to 15 Democratic votes to pass the bill due to opposition from some Republicans wary of the proposed coverage caps. A House GOP source familiar with negotiations said a day before the vote that Republican support was coming in stronger than expected, leaving all eyes on the other side of the aisle.

Duggan was also in Lansing on Wednesday urging support from Democrats, but he didnt make much headway, said state Rep. Fred Durhal III, D-Detroit.

Hes pushing very hard to gain more votes, but I think people are still in the same spot they had been, Durhal said.

The legislation would allow motorists to choose between three levels of personal injury protection, ending a longstanding requirement that all auto policies include unlimited lifetime medical coverage for costly catastrophic injuries.

Motorists could still choose unlimited coverage or plans capping medical expense coverage at $500,000 or $250,000, which would include $225,000 for emergency treatment and $25,000 for extended care.

Older motorists who are at least 62 years old and already have lifetime benefits through Medicare or retiree health care could opt out of personal injury protection all together.

The legislation seeks to force premium reductions for at least five years by requiring insurers to file rates that reflect savings expected from the legislation.

Democrats do not have a unified caucus position on the bill itself, but they had generally agreed not to support any plan that would cap benefits without a guarantee of significant savings, which many argue the plan does not fully provide.

Insurers would need sign off from the Department of Insurance and Financial Services if their average rates for personal injury protection failed to fall 40 percent for $250,000 policies, 20 percent for $500,000 policies or 10 percent for polices with unlimited medical coverage.

The Democratic caucus is remaining strong and holding strong on its position where we want to make sure our citizens are protected, Durhal said.

A handful of Democrats supported the bill from the start, including Rep. Leslie Love, D-Detroit, who said committee amendments to push rate reductions and inform motorists of their options made the plan even better.

We have to treat adults like adults and allow them the opportunity to choose, Love said of the proposal to allow coverage caps. There is a choice called the unlimited choice that is still available that is exactly what you have today, so I dont see what the big fuss is about.

As of Wednesday, Love said she was not sure whether the Republican majority would secure enough votes from Democrats to overcome opposition from some GOP members.

Thats a job for the speaker and his crew to really work on, and the stakeholders, she said. But there are billions of dollars invested in keeping this just the way it is. It is beneficial to the players who profit from auto accidents. Im tired of the people getting the short end of the stick.

The legislation has sparked intense lobbying from opponents like the Michigan Health and Hospital Association and supporters aligned with Duggan, including business organizations and Dan Gilberts Quicken Loans.

A group called Reform Auto No-Fault Now, which is not listed in state incorporation or campaign finance records, was running Facebook ads this week urging support for the bill and accusing at least one legislator of fighting for special interest group.

While motorists could save on car insurance, the non-partisan House Fiscal Agency projects taxpayer costs for Medicaid would rise as more injured residents are forced onto the government-run health care plan. State spending would jump $500,000 in the first year and $80 million annually within a decade, according to the agency.

The latest version of the bill would establish a cap on reimbursement rates for hospitals and other medical providers that treat injured motorists. They could not charge auto insurers more than 160 percent of Medicare rates, up from 125 percent in the initial legislation.

Even if the bill passes the House, it could face an uphill battle in the state Senate, where Majority Leader Arlan Meekhof has compared the cost-control features to a form of government price fixing he will not support.

I havent seen anything yet thats changed my mind, Meekhof, R-West Olive, said Wednesday.

Under the House plan, insurers would not be required to pay for more than 56 hours of home attendant care, and the proposal would also cap charges for ambulance care and other ground transportation.

The proposal would also make it harder for attorneys to file a lien against insurers to seek payment, limit a time line for awarding attorney fees and prohibit those fee awards for attorneys who had a financial interest in the person who provided medical treatment.

As amended Thursday, the bill would allow the state to fine insurers between $10,000 and $20,000 if they do not act in good faith to pay claims, and up to $100,000 if the attorney general is forced to take civil action.

Hospitals could also sue an insurance company if a claim is one month overdue a start change from a court decision that prevent certain lawsuits involving overdue claims to hospitals.

A coalition of House Democrats and Republicans opposed to the Duggan-Leonard plan have pushed for legislative hearings on a separate package supported by the Coalition to Protect No-Fault Auto advocacy group.

It would maintain unlimited lifetime injury benefits but attempt to combat fraud, establish fees for some medical providers and prohibit insurers from using non-driving factors like ZIP codes or gender to set rates.

But House Insurance Committee Chair Lana Theis, the Brighton Republican who sponsored the choice plan backed by Leonard and Duggan, has made clear she is not interested in the competing proposal.

I am looking for things that will actually reduce the costs of insurance, she said last week, suggesting the alternative package would not do so.
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