Preserving and Protecting Michigan's No-Fault System
Michigan’s no-fault auto insurance system is in desperate need of reform. While it was once the envy of the nation, its high level of mandated medical benefits has become too costly, unsustainable and duplicates other health care coverage. Staggering increases in the costs of providing mandated unlimited, lifetime medical coverage as part of an auto insurance policy has pushed the price of auto insurance 20% to 25% higher than neighboring states. Providing consumers the opportunity to choose the medical coverage level that best fits their needs and implementing a medical fee scheduled will allow them the ability to reduce their auto insurance premiums.
Making Common Sense Changes
Legislation in the State House (House Bill 4936) would provide consumers choice, implement a medical fee schedule and ensure the long-term viability of the no-fault auto insurance reform. Under the plan, consumers could choose the level of medical benefits that fits their individual needs instead of being forced to a one-size-fits-all system. A medical fee schedule, similar to one used in the workers' compensation system, would control the staggering increases in medical care paid for by consumers.
Michigan Drivers Pay the Price
In other states, drivers have choices in the amount of medical coverage they purchase in their auto insurance policies. Michigan drivers deserve the same opportunity.
The average auto insurance premium in Michigan is $1,035 according to the most recent data available by the National Association of Insurance Commissioners. Meanwhile, neighboring state residents pay a lot less due to lower mandated benefits. The average auto insurance premiums in states bordering Michigan follow: Ohio ($693); Indiana ($700); Illinois ($798) and Wisconsin ($641). The cost of auto insurance could play a part in a person’s decision whether or not to relocate to Michigan.
If policyholders had a $250,000 coverage option, they would continue to have the best benefits in the country — 500% more than the state with the next highest mandated benefits. The medical limits for the other no-fault states follow: Florida, $10,000; Hawaii, $10,000; Kansas, $4,500; Kentucky, $10,000; Massachusetts, $8,000; Minnesota, $40,000; New Jersey, $15,000; North Dakota, $30,000; Pennsylvania, $5,000; and Utah, $3,000.
Most accidents result in injuries below $250,000. In a study by EPIC Consulting, LLC., 99.1 percent of all auto accident injuries are below $250,000. It is not news that medical costs have been increasing significantly, driving up the price of auto insurance for Michigan policyholders. During the last 10 years, the average auto insurance Personal Injury Protection (PIP) medical claim rose more than 166%, from $13,617 in 2000 to $36,245 in 2010.
In addition, under the current system auto accident injury costs appear to be higher in Michigan than other states. According to a 2010 study by the Rand Institute for Civil Justice, injury payments in Michigan are 57% higher than other states.
High Cost of Reimbursements
One of the reasons the current no-fault auto insurance system is unsustainable is the higher costs charged for medical services.
On average, reimbursement costs for no-fault claims are roughly three times the reimbursement costs for workers’ compensation and four times the reimbursement costs for Medicare for the same procedure. Even one of the most basic (and frequently used) of today’s diagnostic tools, an X-Ray, is billed nearly three times the rate under no-fault than it is billed under the workers’ compensation fee schedule. This has a significant impact on auto insurance premiums paid by Michigan drivers and businesses.
The workers’ compensation system has a medical fee schedule that works. No matter what hospital you are in, or which doctor is treating patients, the workers’ compensation reimbursement is an established, set rate.
A medical fee schedule is one of the most common cost containment tools used in the workers’ compensation insurance system. Forty-two states use some sort of medical fee schedule. In fact, the Workers’ Compensation Research Institute (WCRI) found in a 2010 study that costs per workers’ compensation claims in Michigan were lower than typical, compared to 15 other large states. One of the factors that contributed to the lower claims cost, according to WCRI, was Michigan’s ability to control medical payments.
By establishing a similar fee schedule for auto insurance medical coverage, Michigan can ensure that the costs will remain low.
Consumers Benefit with No-Fault Auto Insurance Reform
Consumers in Michigan would still have the highest auto insurance medical benefits in the country under the no-fault auto Insurance reform plan while lowering what they pay for auto insurance. According to a 2007 study by EPIC Actuaries, a motorist could save 15 to 40 percent on their auto insurance, by adopting a fee schedule and providing coverage options, depending on the coverages they select. In addition, the plan would ensure the stability of the no-fault auto insurance system for the future.
Preserving and Protecting Michigan's No-Fault System
Michigan’s no-fault auto insurance system is in desperate need of reform. While it was once the envy of the nation, its high level of mandated medical benefits has become too costly, unsustainable and duplicates other health care coverage. Staggering increases in the costs of providing mandated unlimited, lifetime medical coverage as part of an auto insurance policy has pushed the price of auto insurance 20% to 25% higher than neighboring states. Providing consumers the opportunity to choose the medical coverage level that best fits their needs and implementing a medical fee scheduled will allow them the ability to reduce their auto insurance premiums.
Making Common Sense Changes
Legislation in the State House (House Bill 4936) would provide consumers choice, implement a medical fee schedule and ensure the long-term viability of the no-fault auto insurance reform. Under the plan, consumers could choose the level of medical benefits that fits their individual needs instead of being forced to a one-size-fits-all system. A medical fee schedule, similar to one used in the workers' compensation system, would control the staggering increases in medical care paid for by consumers.
Michigan Drivers Pay the Price
In other states, drivers have choices in the amount of medical coverage they purchase in their auto insurance policies. Michigan drivers deserve the same opportunity.
The average auto insurance premium in Michigan is $1,035 according to the most recent data available by the National Association of Insurance Commissioners. Meanwhile, neighboring state residents pay a lot less due to lower mandated benefits. The average auto insurance premiums in states bordering Michigan follow: Ohio ($693); Indiana ($700); Illinois ($798) and Wisconsin ($641). The cost of auto insurance could play a part in a person’s decision whether or not to relocate to Michigan.
If policyholders had a $250,000 coverage option, they would continue to have the best benefits in the country — 500% more than the state with the next highest mandated benefits. The medical limits for the other no-fault states follow: Florida, $10,000; Hawaii, $10,000; Kansas, $4,500; Kentucky, $10,000; Massachusetts, $8,000; Minnesota, $40,000; New Jersey, $15,000; North Dakota, $30,000; Pennsylvania, $5,000; and Utah, $3,000.
Most accidents result in injuries below $250,000. In a study by EPIC Consulting, LLC., 99.1 percent of all auto accident injuries are below $250,000. It is not news that medical costs have been increasing significantly, driving up the price of auto insurance for Michigan policyholders. During the last 10 years, the average auto insurance Personal Injury Protection (PIP) medical claim rose more than 166%, from $13,617 in 2000 to $36,245 in 2010.
In addition, under the current system auto accident injury costs appear to be higher in Michigan than other states. According to a 2010 study by the Rand Institute for Civil Justice, injury payments in Michigan are 57% higher than other states.
High Cost of Reimbursements
One of the reasons the current no-fault auto insurance system is unsustainable is the higher costs charged for medical services.
On average, reimbursement costs for no-fault claims are roughly three times the reimbursement costs for workers’ compensation and four times the reimbursement costs for Medicare for the same procedure. Even one of the most basic (and frequently used) of today’s diagnostic tools, an X-Ray, is billed nearly three times the rate under no-fault than it is billed under the workers’ compensation fee schedule. This has a significant impact on auto insurance premiums paid by Michigan drivers and businesses.
The workers’ compensation system has a medical fee schedule that works. No matter what hospital you are in, or which doctor is treating patients, the workers’ compensation reimbursement is an established, set rate.
A medical fee schedule is one of the most common cost containment tools used in the workers’ compensation insurance system. Forty-two states use some sort of medical fee schedule. In fact, the Workers’ Compensation Research Institute (WCRI) found in a 2010 study that costs per workers’ compensation claims in Michigan were lower than typical, compared to 15 other large states. One of the factors that contributed to the lower claims cost, according to WCRI, was Michigan’s ability to control medical payments.
By establishing a similar fee schedule for auto insurance medical coverage, Michigan can ensure that the costs will remain low.
Consumers Benefit with No-Fault Auto Insurance Reform
Consumers in Michigan would still have the highest auto insurance medical benefits in the country under the no-fault auto Insurance reform plan while lowering what they pay for auto insurance. According to a 2007 study by EPIC Actuaries, a motorist could save 15 to 40 percent on their auto insurance, by adopting a fee schedule and providing coverage options, depending on the coverages they select. In addition, the plan would ensure the stability of the no-fault auto insurance system for the future.