State Sen. Wayne Schmidt on Tuesday supported the Senate plan to reduce Michigan’s highest-in-the-nation auto insurance rates.
“This was a difficult vote,” said Schmidt, R-Traverse City. “I’ve seen the fantastic benefits we have in our state and I hate to tamper with that quality of care. The simple fact, however, is people are being priced out of being able to drive, and we can’t have that.”
Michigan drivers pay the most expensive auto insurance rates in the country. That’s because, under the current system, all motorists in the state are legally required to carry unlimited, one-size-fits-all personal injury protection (PIP) coverage, which pays for uncapped medical expenses resulting from injuries sustained in an auto accident. All auto insurance companies must also pay an assessment to the Michigan Catastrophic Claims Association (MCCA) to cover medical costs for claims that surpass $555,000, which is ultimately passed on to drivers.
Additionally, there is no existing fee schedule for medical care provided through a no-fault claim. That means health care providers can charge whatever they want for care, a factor that balloons costs to unaffordable levels.
Senate Bill 1 would allow policyholders the choice to select coverage that best meets their needs and budget. Specifically, the legislation would eliminate the existing PIP requirement and allow drivers over the age of 62 the option of allowing Medicare or their other health care benefits to cover medical costs. It would also give younger drivers the ability to choose an amount of coverage that suits their needs. Savings would correspond with the chosen benefit level.
“When you choose a health insurance or life insurance policy, or a policy for your business, you have choices based on your specific needs and budget,” Schmidt said. “Today’s reforms will allow you to have those same choices when purchasing auto insurance.”
The legislation also aims to provide greater transparency and equity in health care billing practices; crack down on unnecessary medical treatments; reduce the system’s susceptibility to lawsuits, fraud and conflicts of interest; and cut down on the number of uninsured drivers through more affordable rates.
“We’re not eliminating the quality of care that the no-fault system provides,” Schmidt said. “We’re simply allowing people the option of purchasing what they can afford.”
SB 1 was approved by the Senate and will now move to the House of Representatives for further consideration.