The truth about insurance reform

Recently, Michigan’s House of Representatives had the tremendous opportunity to vote to reform Michigan’s auto insurance. I say tremendous because it has been decades since the last vote to overhaul and changes are so desperately needed.

The reforms would have allowed seniors to avoid purchasing personal injury protection, or PIP, if they have similar coverage through retirement benefits or Medicare, potentially saving seniors hundreds to thousands of dollars a year. Also, increased fraud protection and guaranteed savings to all Michigan residents in a three-tiered, choice system: 10 percent average PIP savings for those choosing the same unlimited coverage we all have now, 20 percent average PIP savings for $500,000 coverage, and an average of 40 percent PIP savings for those taking $250,000 in coverage. This lowest coverage would still be more than five times the next-highest mandated coverage in the U.S. — New York at $50,000.

Unfortunately, the effort failed to get enough votes. State Rep. Scott Dianda voted no and has tried to justify his vote to U.P. residents by claiming the plan would have reduced coverage and provided no savings except for Detroit. This just isn’t true, as I have detailed above. Even the insurance industry complained the savings were too high. And the $500,000 coverage would cover over 99 percent of annual claims.

The bills Rep. Dianda is plugging do little to address insurance costs and possibly would have made them even more expensive. These bills have a few merits that appear to have been mirrored in the first plan, but savings for seniors required significantly more expensive supplemental insurance and fraud reform that would cost more and take significant time before savings materialized. The bills do nothing to control the costs charged for PIP. These bills are being pushed by the same lobbyists and trial attorneys that have stifled any changes for more than 20 years and have little substance.

The House Democratic caucus demanded a no vote for any changes to PIP, even though it is the largest driver of auto insurance costs. Only four of their members broke ranks to support saving their constituents money. However, even though the bill failed a few weeks ago, members can, as the representative should, change their minds and let the chairwoman know they are ready to vote for their people and not their party; their citizens’ money, not hospitals’ or insurance companies’ money.

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