The boards of a handful of Michigan counties have taken it upon themselves to weigh in on the state’s auto insurance laws.
Several others plan to join them.
These counties are all in agreement: Governor Gretchen Whitmer and the Legislature must roll back some of the long-awaited reforms they agreed to in 2019 that are saving Michigan drivers hundreds of dollars a year.
You might be wondering what auto insurance laws have to do with county governance. The answer is: not much.
These county councils, however, pass resolutions urging the state to make a very specific change to its auto insurance laws. They want lawmakers to remove limits on what medical providers can charge for the rarest and most expensive services, such as 24-hour home care and housing for accident survivors.
These resolutions appear to be inspired by talking points from medical providers who would directly benefit if the law were to be changed.
The resolution passed by Midland County, for example, calls the problem “a humanitarian crisis born of government-imposed price-fixing.” This hyperbole is taken straight from the website of the Michigan Brain Injury Provider Council, a special interest group of medical providers that lobbies against limits on what they can charge insurers.
It’s hard to say why these counties took so long to recognize the problem. Whitmer and the Legislature approved cost control reforms in 2019; they have been coming for more than two years.
The counties have remained largely silent on these reforms so far. It was only after cost controls came into effect last July and medical providers began to feel a pinch that this became a ‘humanitarian crisis’.
The counties make a number of unsubstantiated claims with these resolutions.
For example, the Midland resolution, like many others, appears to accuse the entire auto insurance industry of fraud. It reads: “Despite the legal requirement (to pay higher rates), Michigan auto insurance companies are only paying providers 45% of what they were receiving in January 2019.”
It’s a bold claim, but the resolution doesn’t point to any supporting evidence.
These resolutions also exaggerate the size of the potential problem. Oakland County, for example, says “already more than 18,000 people with spinal cord injuries, brain injuries and other catastrophic injuries in Michigan need to find another way to receive care and support. “.
This is wrong on two levels. First, only about 6,600 people currently receive the extremely expensive long-term care that was subject to cost control. Second, even among this small group, not everyone has to change care providers.
It is true that a small number of seriously injured accident survivors may need to change their care provider or change their level of care. But Whitmer and the legislature have tried to ease this transition in several ways.
As mentioned, they gave medical providers and their clients two full years to adjust to the reforms. They also asked the state insurance department to help people who are having trouble with their care. Since the new tariffs took effect, there have only been 114 formal complaints, and 97 of them have been resolved. The Legislature even set up a $25 million relief fund for medical providers who need financial support to adjust to cost control. In February, only three had asked for help.
It is difficult to determine the exact extent of the problem, but it is far from a crisis, despite the rhetoric of special interest groups.
Even with the 2019 reforms, Michigan still offers one of the most generous medical coverages in its auto insurance laws nationwide. If it’s a humanitarian crisis, what do you call the situation in almost every other state – the apocalypse?
One thing is clear, though: the 2019 changes allow more people, especially low-income households, to afford car insurance. Cost controls and other reforms are reducing costs for millions of Michigan drivers who have paid the highest insurance rates in the nation for years.
Michael Van Beek is Research Director at the Mackinac Center for Public Policy.