Lawmakers revisit auto insurance law, seek higher payouts for crash victims

• Michigan Senate bills would increase insurance reimbursements for health care services provided to auto accident survivors 
• Providers, survivors have argued existing reimbursement caps put the health care industry in peril and interrupted patients’ access to high-quality care
• Insurance industry warns proposed changes could impact auto insurance costs for all drivers

Michigan lawmakers this week introduced bills designed to expand medical care for victims of catastrophic car crashes who say their care was compromised by the state's auto insurance overhaul four years ago. 

Crash survivors and their health providers have complained that 2019 changes to the state’s no fault insurance system — designed to lower costs for Michigan drivers — put too many restrictions on medical expenses, slashing the amounts insurers are required to pay by as much as 45 percent.

The bills introduced by Sens. Mary Cavanagh, D-Redford Twp., and Sen. Sarah Anthony, D-Lansing, Senate Bills 530 and 531 would increase reimbursements for health care services provided to auto accident survivors, such as in-home attendant care, and do away with a 56-hour per-week cap on care provided by family members.

Related: 

• Michigan court limits scope of no-fault reform. Will insurance rates rise?
• Michigan Supreme Court hearing on auto no-fault reform: What to know
• No-fault insurance reform may be in play as Democrats take power in Michigan
• Court: Past crash survivors not subject to Michigan auto no-fault limits

The bills would not impact drivers’ ability to choose their preferred level of personal injury protection coverage, a key change included in the 2019 reforms.

“For years, people severely injured and permanently disabled by accidents have been priced out of the care that their lives depend on,” Anthony said in a statement, adding that the bills, if passed, will “ensure they receive access to the support they need.” 

Advocates have petitioned the Legislature to raise caps on medical expenses since they went into effect but have had limited success with lawmakers worried that changes could drive up the cost of car insurance. Those advocates scored a key victory in July when the Michigan Supreme Court ruled that the law didn’t apply to people injured prior to the 2019 law’s passage. 

The decision impacted thousands of crash survivors, but those injured after the law went into effect are still subject to the fee schedules outlined in the 2019 law. 

The new Senate legislation — also sponsored by Senate Majority Leader Winnie Brinks, D-Grand Rapids, and three Republicans — will affect more recent and future crash victims.

Cavanagh said the bills would address the “unintended consequences” of the insurance reforms and make sure drivers who opt into unlimited auto insurance coverage know they’ll have access to the care they need. 

The bills as proposed would set the reimbursement rate for most medical services to 250 percent of what Medicare pays. For other common treatments for crash survivors, such as in-home caregivers, the legislation sets starting rates that would be adjusted annually based on the Consumer Price Index. 

Insurance providers have argued that the existing medical fee schedule is necessary to keep costs down, warning that auto insurance rates could creep back up without existing checks on medical reimbursements. 

Prior to 2020, Michigan was the only state where drivers were required to pay for full personal injury protection insurance. That meant that catastrophically injured crash survivors received unlimited medical benefits for the rest of their lives, but those guarantees came at a cost: Michigan consistently topped the nation in highest average auto insurance rates, and costs were especially high in metro Detroit. 

Unlimited coverage became optional when the new law took effect, and drivers are now allowed to pick from varying levels of coverage. An analysis from Insure.com found Michigan now ranks fourth in the nation for highest auto insurance rates.

Erin McDonough, Executive Director at the Insurance Alliance of Michigan, said in a statement the group is still reviewing the bills, but urged lawmakers to carefully consider how the changes would affect insurance costs. 

“Auto no-fault reforms have saved Michigan consumers more than $5 billion by cracking down on fraud, reining in rampant overcharging by medical providers and providing consumers more choices,” she said.

Health care industry officials and consumer advocates called the legislation long overdue. Tom Judd, executive director of the Michigan Brain Injury Provider Council, urged speedy passage of the bills, noting that “further delays and continued suffering are unnecessary.” 

To become law, the bills would need to pass the House and Senate and be signed by Gov. Gretchen Whitmer, who has signaled she’d support legislative changes. They’re currently before the Senate Finance, Insurance and Consumer Protection Committee, chaired by Cavanagh.