What do we need to do to get lower auto insurance rates in Michigan?
For 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?
We 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?
Each 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?
States 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?
Under 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?
Write 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.