Derek Robertson May 29, 2019
Gov.
Gretchen Whitmer is expected to take the opportunity at this week’s Mackinac
Policy Conference to sign Michigan’s long-awaited no-fault reform bill as a
big bipartisan
victoryon Thursday morning.
But
critics are making a last-minute plea that it ultimately will result in less
medical coverage for the state’s neediest residents. And policy analysts say
that the bill’s much-touted savings for consumers will amount to an elaborate
cost shift when it goes into effect in more than a year.
The
nonpartisan Senate Fiscal Agency (SFA) released its evaluation of Senate
Bill 1 Tuesday, sending policy wonks off to the races with regard to
where the financial burden taken off auto insurers’ shoulders may now fall
elsewhere.
Unlike
any other state in the nation, Michigan currently requires all drivers to
purchase unlimited, lifetime medical coverage through auto insurers as part of
their insurance plans, a requirement that’s costly to both parties and will no
longer exist under the terms of the new bill.
The SFA
predicts an increase of $70 million, or 1.3 percent, to state Medicaid costs
over the next decade as a result of drivers choosing a plan that doesn’t meet
their ultimate health care spending needs. That’s a much smaller figure than
the $83 million predicted by
Michigan’s Department of Health and Human Services in just the first year under
the original, Republican-penned plans that were adapted into SB 1.
State
policy experts agree that regardless of the amount, this means Michiganders
will still be paying much of the exorbitant costs that made the current system
so objectionable to both politicians and the average Michigan driver — it’s
just that the cost will be collected now through different channels.
“Those
costs are currently being borne by the insurance system and we’re paying them
through higher insurance rates, so we’re going to pay it either way,” said Eric
Lupher, the president of the nonpartisan Citizens Research Council in Livonia.
“Whether
it should be socialized — not as a pejorative term, but just whether it should
be spread among all participants — through insurance rates or through the tax
system is a question for debate, but either way it’s pretty much the same group
of us paying.”
Michigan
currently pays for about one-quarter of its total Medicaid costs through the
state’s General Fund, with the rest covered by the federal government. The
state’s top budget officials again pointed out earlier this
month that the General Fund has remained largely flat since the late
1990s, which “constrains the ability to have revenue for new projects.”
Lupher
said Michigan will undoubtedly have to raise more revenue to cover costs, but
that it will be difficult to ascribe them directly to a potential bump in
Medicaid spending.
“Our
general fund is very tight to begin with … something’s got to give at some
point, and yes, that might lead to a request to increase taxes, but will we
know for sure it’s because of insurance? It’s hard to say.”
Charles
Gaba, an Affordable Care Act (ACA) enrollment analyst in metro Detroit,
expanded in an email on what the newly shared burden of health care costs may
look like.
“Some
will be shifted to Medicare (mostly federally funded, of course, which means
federal taxes); some will be shifted to Medicaid (state taxes as you note plus
about double that in federal taxes); some will be shifted to private insurance
in the form of higher premiums; and some won’t be paid for at all,” Gaba wrote.
He
spoke in a later conversation about the financial uncertainty that might occur
at both the personal and institutional level, saying, “You’ve gone from every
party having a blanket plan where they’re covered no matter what, to now just a
mishmash, and that’s where it tends to get messier.”
Senate
Minority Leader Jim Ananich (D-Flint), who was directly involved in the
“four-quadrant” meetings between Whitmer and the four legislative caucus
leaders over the bill’s terms that preceded its passage last week, told
the Advance Wednesday he’s confident that Michiganders will
see an overall savings.
“Other
states have figured out a way to make sure you hold the line with Medicaid
costs, but also coordinate benefits with private healthcare,” Ananich said. “I
think the citizens won’t see that [increased cost burden]… Obviously,
there will be some increases in the Medicaid budget, but I think we put enough
buffers in place and our protections in place to make sure that it’s not
astronomical.”
The
scenario Gaba described in which costs don’t get covered at all is a special
concern to health professionals like Julia Pulver, a registered nurse and a
Democratic former state Senate candidate.
In
an op-ed published
on her Medium page Tuesday, Pulver warns that under the new system Michigan
consumers won’t be entitled to the same level of medical care they’ve come to
expect from their auto insurance coverage. The new bill eliminates the
requirement that all Michigan drivers purchase unlimited lifetime medical care,
a cost-saving effort that Pulver says will hurt some of Michigan’s most
vulnerable residents.
Pulver
draws a distinction between the Personal Injury Protection (PIP) benefits
mandated under the current system, which provide for rehabilitation and care
long after initial auto injuries have healed, and the more limited care that
will be offered under new plans once the bill takes effect in July 2020.
“Not
only are you being asked to predict the future (which is the only way to know
‘which policy option works best for you’ since no one PLANS to be hit by a
drunk driver, distracted driver, or become a victim of road rage),” Pulver
wrote, “we are going to allow the insurance companies to now prey on the
uninformed, poor and elderly by offering them a substandard product in the form
of ‘options.’”
The new
bill will offer Michigan drivers the traditional option of unlimited medical
coverage, a $50,000 option for those covered by Medicaid, a $250,000 option, a
$500,000 option and a complete opt-out for those with qualifying private health
insurance.
Pulver’s
concern about insufficient coverage was shared by lobbyists in favor of the
current system like the Coalition to Protect Auto No-Fault (CPAN), which called
the bill a “destructive piece of legislation” and a “total gift to the
insurance industry” in a statement last week, and the Michigan Brain Injury
Provider Council (MBIPC), which released a statement Wednesday urging Mackinac
attendees to re-think the bill’s impact.
MBIPC
president Tim Hoste wrote that “individuals with severe brain injuries will be
forced to go without specialized treatment and will have limited options… the
state government is dooming them to poor alternatives that will constrain their
full recovery and extend their hardships throughout their lifetime.”
Another
major concern of the bill’s critics is its vague commitment to preventing
discrimination by location in rate-setting. The new bill explicitly forbids
using the postal code where a vehicle is registered in the rate-setting
process, but allows for the use of “territory,” a term with no concrete definition
in the bill itself.
State
Rep. Isaac Robinson (D-Detroit) was one of the 19 House members not to vote for
the bill, and has been an outspoken critic since its parameters were revealed
last Friday. Speaking to the Advance, he argued that he and his fellow
Detroit lawmakers were unfairly shut out of the deal-making process.
Those
lawmakers introduced a series of bills last
week prior to Senate Bill 1’s passage that were aimed at directly
assisting Detroit drivers. Their language was not adopted into the final bill.
Detroit has some of the highest auto insurance rates not just in the state, but
in the country.
“They
had the opportunity to give me support when I had amendments to address
redlining [geographical discrimination],” Robinson said. “They couldn’t even
just be undecided for a while, which would have sent Whitmer back to the table
to negotiate something for people who have been discriminated against for
decades.”
“The
governor and her communications staff… are putting out talking points that lead
to people in my community believe they’re getting a reduction in their bill
because they believe credit score and ZIP code don’t matter anymore, and that’s
just not true.”
State
Sen. Adam Hollier (D-Detroit), who voted for the bill, told the Advance Wednesday
that he disagreed with the characterization of its geographical guidelines as
toothless, and that he’s prepared to go back to the drawing board if it
proves as such.
“Will
there be some difference from one territory to another based on things that
they can prove actuarially? Absolutely,” Hollier said.
“But
the increase in regulation from DIFS [Department of Insurance and Financial
Services] that I think Governor Whitmer is going to emphasize should deal with
that… what we need to be doing is making sure we have a system and a regulator
in DIFS that have the tools necessary to go after bad actors.”
“I
think we’re getting a little bit closer. If there is a bad actor that isn’t
[being dealt with] I’m committed to going back and dealing with that, if there
needs to be a legislative push… But I think this legislation provides more
consumer protections that have ever existed.”
The
governor’s office did not immediately respond to a request for comment regarding
Robinson’s and others’ critiques of the bill, but she and other top Democrats
released celebratory statements regarding its passage last week, Whitmer saying
that “when both parties work together and build bridges, we can solve problems
and make life better for the people of Michigan.”
Senate
Minority Leader Ananich, who represents another one of the state’s urban areas
hardest hit by exorbitant auto insurance rates, said last Friday, “I think
there will be natural pressure to make sure that rates are based on a person’s
driving record… And I think that’s an important step, something we haven’t had
in a long time.”
Advance reporter
Nick Manes contributed to this report.
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