Monday, 16 October 2017 15:50

Theis Testifies On Her Auto Insurance Reform Bill

Written by Jessica Mathews, WHMI 93.5FM

Testimony in support of and against an auto insurance reform bill that would eliminate Michigan’s no-fault requirement was heard Oct. 3.

The House Insurance Committee has begun taking testimony on the latest legislative attempt to change Michigan's no-fault auto insurance law and a bill that would allow drivers to opt out of lifetime, unlimited medical benefits coverage. Republican State Representative Lana Theis of Brighton Township chairs the committee. She testified on the legislation she sponsored and maintains it will make auto insurance much more affordable in Michigan.

Theis, House Speaker Tom Leonard and Detroit Mayor Mike Duggan are among those leading a bi-partisan coalition pushing the legislation. Theis said House Bill 5013 guarantees rate reductions for motorists who choose alternative personal injury protection (PIP) coverage levels, cracks down on fraud and abuse, and reins in medical costs by establishing a fee schedule. She says the plan would continue benefits for those already receiving lifetime health care after a catastrophic accident. 

Democrats on the committee were leery that the insurance industry would keep reduced rates in effect after that, but were also concerned about medical cost burdens falling on the state when coverage runs out for injured drivers who choose lower level policies. Other criticism involved imposing caps on medical costs, but not ensuring drivers who purchase the unlimited medical coverage option get relief in their premiums. Additional concerns were expressed that the legislation would not change how insurance companies can charge individuals different rates based on non-driving factors, such as zip codes and marital status. 

Hearings are expected to continue. 

The nonpartisan House Fiscal Agency has released its analysis of House Bill 5013. It says the plan would reduce state revenues and create increased costs for Medicaid along with other indeterminate state department costs. The bill also could create additional local law enforcement and court costs. The agency says the annual revenue reduction is expected to fall somewhere in the $20 to $35 million range and would be borne by the state's General Fund. It adds that the Medicaid program costs would increase to the extent that the bill would shift health care costs from private automobile insurers to Medicaid. Preliminary estimates indicate the bill would increase state costs by $10 million in the first year, and would steadily grow to approximately $150 million in annual state costs within 10 years. 

A competing proposal led by a separate bi-partisan coalition, which includes Republican Senate Majority Leader Arlan Meekhof, is also in the works. It would protect auto-fault and attempt to reform the system. 

We thank WHMI 93.5FM for reprint permission.