Auto No-Fault Reform Bill Clears House Insurance Committee
October 27, 2017
An amended proposal to reform Michigan’s auto no fault insurance system has moved out of committee but its fate in the House is uncertain.
An amended bill was passed 9-5 by the House Insurance Committee on a mostly party line vote Thursday. House Bill 5013 is sponsored by Republican State Representative Lana Theis of Brighton Township, who chairs the committee. It has bi-partisan support and is backed by Detroit Mayor Mike Duggan and Republican House Speaker Tom Leonard. Michigan’s rates are among the highest in the nation and the proposal would no longer require the purchase of unlimited, lifetime medical benefits for those catastrophically injured in vehicle accidents. Theis says it’s been a long time problem and people deserve a choice, so they’re giving an opportunity to legislators on the floor. She says this is the only area where the state mandates people purchase unlimited, lifetime medical benefits for those catastrophically injured in accidents and people are smart enough to make those decisions for themselves.
The original bill called for a guaranteed 40% reduction in insurance rates for those that choose a lower $250,000 level of coverage for personal injury protection. It faced criticism since there were no breaks for those choosing other levels. The amended bill includes a 20% reduction for those who choose $500,000 PIP coverage and a 10% reduction for unlimited coverage, which is the current requirement. An amendment that would have required a 40% rate reduction no matter what level of coverage failed on a party line vote.
The proposal now moves to the House floor. While it has bi-partisan support, many lawmakers have concerns with the measure and it faces opposition from a number of parties, thus its fate in the House is unknown. The insurance industry has voiced concerns with the mandatory rate rollbacks while Senate Majority Leader Arlan Meekhof is opposed to imposing mandates on rates insurance companies can charge their customers. He’s behind a separate bi-partisan proposal that has yet to see any hearing. The proposal has faced criticism for imposing caps on medical costs but not ensuring drivers that purchase the unlimited medical coverage option get relief in their premiums.
The nonpartisan House Fiscal Agency released a third revision to its analysis of House Bill 5013, which is attached below. It says House Bill 5013 "could reduce state revenues by an estimated $5-$10 million per year and could create increased costs for Medicaid by an estimated $80 million per year after 10 years." (JM/JK)