Proposal to Change Michigan Auto No-Fault Insurance

Revised 11/16/11

Background

Michigan’s no-fault auto insurance system is a privately funded system that is a model for the nation. It provides lifetime Personal Injury Protection, also known as PIP, (full injury and rehabilitation benefits) for auto accident victims so that they can access covered medical care and have the highest quality of life possible after their injury.

In mid-September 2011, HB 4936 sponsored by State Representative Pete Lund (R-Shelby Township) was introduced in the Michigan Legislature. This Bill makes massive changes in the Michigan auto no-fault insurance system and will result in significant cuts to auto injury coverage, including coverage for medical care, and a restriction in the legal rights of auto accident victims.

The current lifetime coverage for reasonably necessary products, services, and accommodations is eliminated. No one will be able to buy this coverage any longer. Rather, coverage for such expenses will only be available in incremental coverage levels of $500,000, $1 million and $5 million.

Persons who suffer catastrophic injury and who did not buy enough PIP coverage to cover the expense, will, in many cases, not be covered for the medical care, treatment, and rehabilitation they require in order to attain the highest level of recovery. They will, in many cases, require emergency care that they can’t pay for. As a non-profit community hospital, Munson Medical is required to treat all patients regardless of their ability to pay.

Consequences

There are numerous reasons why the proposal to change Michigan’s Auto-No Fault law is bad public policy. Reducing Michigan’s lifetime Personal Injury Protection (PIP) Benefit will:

• Reduce benefits to auto accident victims
• Impose a government fee schedule on hospitals, physicians, rehab providers and other health care services
• Shift expensive medical costs from auto insurance companies to employer funded health plans, Medicaid and individuals
• Dismantle key tenants of Michigan’s auto insurance system
• Dramatically increase exposure to lawsuits for individuals involved in auto accidents whose medical expenses exceed the coverage limits proposed in the new law

Impact on Munson

Of particular concern is the impact on patient care caused by the adoption of the Worker’s Compensation fee schedule. This government-imposed fee schedule would greatly undermine the trauma system in the State of Michigan and threaten the recovery of seriously injured accident victims. A Worker’s Compensation fee schedule addresses relatively minor injuries aimed at getting individuals back to work. It has no correlation to the more serious, often life-threatening and/or changing health care needs of auto accident victims.

As the only trauma center in northern Michigan, Munson would be disproportionately impacted by this change in the auto no-fault law. A government imposed fee schedule would mean a 50 percent reduction in the total annual payments for hospital services provided to auto accident victims at Munson Medical Center – $6.5 million annually. If Munson loses that level of reimbursement from no-fault auto insurance, it may not be possible for the hospital to continue to provide this very high level of care.

What is Happening Now

Thanks to the concerns expressed by numerous private citizens and groups, including the Michigan Health & Hospital Association and the Michigan State Medical Society, a House vote on HB 4936 has been delayed pending further work and review. However, it is anticipated that the House leadership will continue to push the bill to a vote rapidly.

To learn more about this issue, visit www.cpan.us.

Take Action

You can help stop HB 4936. The need is urgent. Please take action at your earliest convenience. We need your help to ensure that this legislation does not become law in Michigan.

1. If you have a personal relationship with a state legislator and/or a member of their staff, call them and tell them you are deeply concerned about the negative impacts on patients, taxpayers, businesses, health care providers and communities.

2. Download a quick reference contact list and contact your State Representative, and their key staff by phone or email and tell them to vote no on HB 4936, the proposal to change Michigan’s Auto No-Fault Insurance system.  Develop your letter using the talking points or modify a sample letter.

3. Write a letter to the editor of your local newspaper. Develop your own letter using personal experiences and insights along with the talking points provided.

4. Learn more about the issue at www.cpan.us.

5. Share this information with your family and friends and encourage them to help.