FRIDAY, MAY 1, 2015
We all know that auto insurance in Michigan is expensive. In fact, according to the National Association of Insurance Commissioners, our premiums auto insurance premiums rank 7th highest in the country. SB-248 has passed the Senate Insurance Committee and the House Insurance Committee, and sill soon come to a congressional vote. If passed, the framework will be in place to lower Michigan's auto insurance rates.
One of the largest issues has been a combination of Michigan's unlimited medical benefits coupled with auto insurers being required to pay-as-billed for medical services. Other medical payers, such as health insurance companies, pay medical providers based on an agreed schedule of fees - as is the case with PPOs or HMOs. Others such as workers compensation and Medicare pay providers based on a schedule enacted by law. In contrast, Michigan auto insurance companies have been required to pay whatever they're billed by the providers, often being three to four times more that what other types of insurers pay for the same treatment. One element of SB-248 would establish a fee schedule to enable auto insurers to pay amounts similar to that of other health insurance companies. This will not change the medical services available - only the amount auto insurance companies will have to pay for them. Still, there will be no maximum limit or cap on what can be paid...only that along the way, amounts paid will become reasonable and in line with other types of insurers.
SB-248 will provide for an Insurance Fraud Authority to go after schemers who abuse our no-fault insurance system. Michigan's unique unlimited lifetime no-fault medical benefits have led to increasing fraudulent claims. According to a study by Hillsdale Policy Group, auto insurance fraud costs an estimated $400 million. Michigan is only one of eight states without a fraud authority to investigate and prosecute fraud, according to the National Insurance Crime Bureau.
SB-248 still provides for reimbursement for non-skilled family-provided care, but limits payment to family members to $15 hour and no more than 24 hours per day. That's still $131,000 per year! This limit doesn't apply if the family attendant is a licensed professional.
SB-248 proposes a $100 / car rate rollback on auto insurance policies.
SB-248 changes the Michigan Catastrophic Claims Association (MCCA) to a new Michigan Catastrophic Claims Corporation (MCCC) that will function differently and be more transparent. The purpose of the MCCC will be to fund the portion of auto-related medical claims in excess of $545,000. At present, the MCCA pays out over $80 million per month for catastrophic injuries.
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