Michigan's Auto No-Fault System header image

As an advocate for Michigan hospitals and the patients they serve, the MHA is a strong proponent of Michigan’s auto no-fault system. Michigan's auto no-fault insurance law has ensured needed medical and rehabilitation benefits for people injured in auto accidents since 1973. Without it, auto accident victims would not be able to afford the extensive care they require after traumatic injuries.

Michigan’s auto no-fault system has been subject to numerous attacks in the Legislature in recent years. These attacks are funded and promoted by auto insurance companies and are about improving profits and stock valuation rather than protecting consumers and making meaningful reforms.

The MHA is open to participating in the political process and discussing reforms to the system, but from the perspective of Michigan hospitals, Michigan’s no-fault law is about caring for patients and maintaining victims’ access to care following a catastrophic auto accident.

Resources below can help you take action to protect people who suffer catastrophic injuries in auto accidents and ensure they have access to the care they need. 

Auto No-fault Questions and Answers 

What do we need to do to get lower auto insurance rates in Michigan?

Question and Answer iconFor those caring for auto accident patients in our hospitals, Michigan’s auto no-fault law is about making sure anyone injured as the result of an auto accident gets the care and services they need. However, we need to balance access to care with reducing premiums. To do that, the Michigan Health & Hospital Association has recommended the following courses of action on behalf of hospitals and the patients they serve:

  • Establish an anti-fraud bureau to identify and reduce no-fault fraud and abuse.
  • Create treatment guidelines for auto accident victims to reduce variation in care, improve patient outcomes and satisfaction, and reduce overuse and fraudulent claims.
  • Allow senior citizens to be excluded from the medical portion of no-fault to avoid federal coverage mandates and allow Medicare to cover their needs.
  • Ending the auto insurance company practice of setting rates based on factors such as marital status, education level, employment status and credit score, rather than looking at an individual's driving record and history of submitting accident claims.  

It’s important to note that no reform proposal has guaranteed savings or affordability for those who can least afford their premiums. It’s always a good idea to read the fine print when it comes to changes to Michigan’s no-fault law.

What’s behind the high cost of auto insurance in Michigan, especially Detroit?

Question and Answer iconWe know that both the frequency and severity of insurance claims related to auto accidents are higher in Detroit than elsewhere in Michigan. Since hospital prices are not, nor have they ever been, based on a patient’s ZIP code, something other than hospitalization – like aggressive legal tactics, fraud and abuse –  is leading to higher rates in Detroit. Rather than attack the benefits for survivors who truly need them, we should attack overuse, inappropriate care and fraudulent claims.

Is it true that hospitals bill insurance companies whatever they want when it comes to the medical costs for someone hurt in a car accident?

Question and Answer iconEach hospital in Michigan is responsible for setting its own prices for the services and care it provides. As required by federal law, hospitals must charge everyone – including auto insurers – the same amount. Where the difference occurs is what is accepted as payment once services are provided. For example, at Hospital A, the charge for an MRI for someone with health insurance through their employer cannot differ from the charge for the same MRI for someone who was involved in an auto accident. However, some insurers, including auto insurers, negotiate discounted rates with hospitals. Government payers like Medicare, Medicaid and workers’ compensation set their own payment schedules, but these often do not cover the cost of care. In lieu of any kind of pre-existing agreement on payment, the full cost of the service would be expected at the time of payment.

If I have health insurance, why do I need to pay for no-fault car insurance, too?

Question and Answer iconStates without no-fault provide significantly less coverage to accident survivors and take longer to provide compensation. In Michigan, the healthcare required following an auto accident – if care is needed – is often covered by the no-fault policy. This practice has also helped Michigan employers, who may opt to exclude or coordinate auto accident claims from health insurance benefits as a way to manage the cost for employee healthcare benefits.

For individuals with coverage through Medicare or Medicaid, federal laws require those programs to be secondary to any no-fault benefit required by the state. It is also important to note that Medicare does not cover services for auto accident victims such as long-term care, attendant care, replacement services, occupational therapy and other services currently available through the state’s no-fault coverage.

What does my auto no-fault insurance cover beyond medical treatment?

Question and Answer iconUnder Michigan’s no-fault law, individuals injured as a result of an auto accident receive benefits from their auto insurance company regardless of who is at fault for the accident. In addition to medical expenses, no-fault provides the following benefits:

  • Wage loss benefits – earnings that would have been collected had the accident survivor been able to work.
  • Replacement services – routine services that a car accident survivor may not be able to do on their own, such as child care, household chores and yard work.
  • Attendant care – long-term care in nursing or foster homes or in-home nursing care provided by medical staff or a family member.
  • Home and vehicle modification – changes made to homes or cars to accommodate a disabling injury.

It’s important to note that the coverage available through no-fault beyond medical expenses is not typically available through health insurance policies. Also, no-fault covers all family members in the same household, even if that family member is riding in someone else’s car or involved in a car accident while walking or biking.

How can I make sure elected officials address the high cost of auto insurance without taking away the medical coverage I need if I’m seriously hurt in an auto accident?

Question and Answer iconWrite to your representatives in the Michigan House and/or Senate and tell them that limiting medical care to people who suffer catastrophic injuries as the result of an auto accident is not a sensible path to lowering auto insurance rates in Detroit or anywhere else in Michigan.

For help identifying and contacting your elected officials, visit the MHA Legislative Action Center.

Talking Points

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Talking Points

(last updated September 2017)

Michigan hospitals are united around a single goal: to provide the safest, highest quality care to every patient who comes through our doors.

  • Michigan’s no-fault law ensures that accident victims receive the care and rehabilitation they need following catastrophic auto accidents. The law has been in place since 1973 and, without it, most auto accident victims would not be able to afford the care they need.
  • We’re concerned that no-fault proposals with benefit caps will not only drive people into the taxpayer-funded Medicaid program, because those who survive catastrophic auto accidents would face severely limited care options with their own private benefits.
  • Ultimately Michigan hospitals believe Michigan’s no-fault law is about caring for patients. We do not want to jeopardize accident victims’ access to needed medical care, rehabilitation services and post-injury assisted living services based simply on a person’s address.

The Legislature needs to tackle fraud, abuse and overuse in the auto no-fault system before attacking the medical benefits available to those who have already paid for that coverage under auto no-fault.

  • We understand Detroit Mayor Mike Duggan’s commitment to reducing the auto insurance costs in Detroit, but his plan to limit the medical care and services available to drivers in Detroit and elsewhere in Michigan does not make sense if fraud, abuse and overuse within the no-fault system are allowed to continue unchecked.
  • We know that the frequency and severity of insurance claims related to auto accidents are higher in Detroit than elsewhere in the state, but there is no evidence that hospital prices have anything to do with it.
    • Since hospital prices do not vary by the geographic location of a patient’s insurance policy, something other than hospitalization — like aggressive legal tactics, fraud and abuse — are fueling higher auto insurance rates in Detroit.
    • Rather than attack the benefits for injured people, we should attack overuse, inappropriate care and fraudulent claims.
  • Auto insurers take other factors into consideration when setting their rates, including marital status, address, home ownership status, job status, credit scores and education level. On average, nearly 79 percent of Michigan voters disapprove of this practice, commonly referred to as redlining (more than 90 percent of drivers agree that rates should be based on driving record). This practice has not been addressed by the Legislature, nor do any of the current proposals addressing auto insurance rates tackle the issue and its role in the rates drivers pay for car insurance.

Proposals offering drivers auto insurance policies with medical benefit caps are risky for taxpayers, drivers and their families.

  • Once a medical benefit cap is met, car accident victims and/or their families, will be responsible for paying all medical, rehabilitation and therapy costs, as well as any costs necessary for daily living, such as home entry ramps, vehicle modifications, home-based care and more. Costs COULD be borne by an individual’s health insurance plan, if available. However, even if a health plan is covering the individual, a health benefit does not cover many of the catastrophic claims covered by auto no-fault insurance, including replacement cost services, home and vehicle modification, or in-home services for activities associated with daily living, such as preparing meals or getting to work or school.
  • Proposals with benefit caps will result in more individuals enrolling in a taxpayer-funded Medicaid system to get the care they need after they exhaust their limited medical benefit, leading to increased costs for taxpayers. The practice could also result in health insurers increasing their premiums to prepare for the risk of lawsuits to cover massive costs for auto accident victims once those victims’ benefits are exhausted.
  • With the Affordable Care Act’s protections still in question by Congress, many people may not have a health insurance plan to fall back on in the near future.

Instituting government-mandated fee schedules for healthcare providers does not guarantee a permanent, meaningful auto insurance rate reduction for Michigan drivers.

  • Hospital emergency rooms are open and staffed 24 hours a day, seven days a week, 365 days a year, whether emergency or trauma services are needed or not — there are fixed costs that come with being ready to help accident victims and anyone else who is sick or injured at any time, around the clock.
  • Government-mandated fee schedules like workers’ comp and Medicaid do not fully cover the cost of care, so adding another government-mandated fee schedule to the mix puts a strain on hospitals’ finances and could impact other services a hospital provides to every community member, not just auto accident victims.

The MHA and its member hospitals have always been willing participants in discussing meaningful reform that maintains accident victims’ access to care.

  • Since 2011, the MHA has continuously offered to negotiate on no-fault reform efforts, including being willing to lower and freeze hospital reimbursement rates from auto insurers. Those efforts have been categorically rejected by the auto insurers pushing no-fault reform.
  • To date, there has not been a single legislative proposal that guarantees a permanent, meaningful reduction in insurance rates for Michigan drivers.
  • The MHA has suggested to lawmakers and the Snyder administration that work be done to establish best practices related to medical care for auto accident survivors. The MHA has supported various proposals that would create an anti-fraud bureau. Together, these efforts could reveal abuse within the no-fault system and help end the overuse of medical services in Detroit.

Frequently Asked Questions

Q: Aren’t hospitals the problem when it comes to the high cost of auto insurance in Michigan?

  • Hospital charges are not based on a patient’s ZIP code; however, auto insurers do use ZIP codes to determine how much a driver will pay for his or her auto insurance policy.
  • In a recent, three-part series in the Detroit Free Press scrutinizing the cost of auto no-fault claims and lawsuits, the healthcare providers identified were “not part of any major healthcare system.”
  • The Michigan Catastrophic Claims Association shows that hospital expenses are less than 10 percent of the total claims it pays out. Attendant care (through nursing homes, home healthcare services and via family members) accounts for 60 percent of catastrophic claims expenses.
  • On behalf of hospitals throughout Michigan, the Michigan Health & Hospital Association has expressed support for an anti-fraud bureau for the past four legislative sessions. Hospitals also proposed an effort to create treatment guidelines for people injured in auto accidents. These best practices would help reduce variation in care, increase patient satisfaction and patient outcomes, and help reduce overuse and fraudulent claims.

Q: Other states do not have no-fault. What benefit does Michigan have in continuing as a no-fault state?

  • In other states, employer-based healthcare benefits cover the cost of auto accidents, while in Michigan the majority of claim expenses are covered by auto no-fault policies. Michigan employers have excluded or coordinated auto accident claims from health insurance benefits; the loss of auto no-fault coverage in Michigan will cause costs to shift and would most likely result in increased health insurance premiums or greater reliance on government payers, like Medicaid.
  • Medicaid also pays more for auto accidents in other states. In 2011, the Michigan Brain Injury Provider Council commissioned a study about the impact of reducing the personal injury protection benefit in Michigan. It found:
    • For liability coverage (compared to no-fault coverage), Michigan drivers on average paid only $23 more per year than the national average (Detroit is an outlier).
    • While predicting the impact to Michigan’s Medicaid program is difficult, available data suggest that the amount could easily exceed $30 million for long-term care in the first year alone.
  • No-fault systems pay a greater percentage of insurance premium revenue to injured claimants than the tort system. Accident victims in states without no-fault face longer waits for compensation and receive less compensation and fewer services, particularly for rehabilitation and costs associated with daily living.

Q: Why should senior citizens who have Medicare benefits be forced to buy personal injury protection under Michigan’s no-fault law?

  • Federal law requires Medicare and Medicaid to be secondary to any no-fault benefit required by a state.
  • Michigan hospitals support the concept of allowing senior citizens to be excluded from the medical portion of no-fault to avoid the federal mandate and allow Medicare to cover their needs. Writing an appropriate exclusion into law would be complicated, but hospitals have not opposed this concept in the past.
  • It’s important to note that Medicare does not cover many of the services currently provided for through Michigan’s no-fault system, including long-term care, attendant care services, replacement services, occupational therapy, executive functioning therapy for post-traumatic brain injuries, etc.

Q: Auto insurers say they are willing to reduce their rates. Doesn’t this change everything?

  • In 2014, the MHA proposed rolling back hospital prices to 2012 levels. Those prices would have stayed in effect for three years and any price increases for auto no-fault claims after that would have been limited to the medical consumer price index. If this proposal had been implemented, the MHA estimates hospital rates for auto no-fault claims would be at least 20 percent below their expected growth at the time the policy was implemented.
  • Any rate reduction insurers agree to should be closely studied.
    • Most legislation with a rate reduction is related to “base rates” and is done on an average. This means some policyholders could see no reduction while others could see a significant change in their rates.
    • Reducing base rates does not control how auto insurers may use other factors in determining an individual driver’s rates, including credit scoring, ZIP codes, make and model of car, driving record, etc. If the base rates are reduced but rate modifiers are increased, drivers may not see much of a difference in their month-to-month premiums.
    • In studying any kind of rate reduction proposal, there are two important questions that warrant investigation: (1) how much of the rate decrease is related to eliminating the lifetime benefit for the catastrophically injured; and (2) will policyholders be required to continue to pay the MCCA deficit even though they are no longer eligible for catastrophic coverage? 

Members with questions should email Laura Appel at the MHA or call (517) 703-8601.

Take Action

For help identifying and contacting your elected officials, visit the MHA Legislative Action Center.

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