Michigan Auto Law Changes on July 1st Will Change Catastrophic Care

More changes in Michigan’s No-Fault Auto Insurance take effect July 1^st, and many victims of catastrophic accidents could see dramatic changes in the care they get.

Todd Berg of Michigan Auto Law was a guest on the 95.3 WBCK Morning Show with Tim Collins and says the law, changed in 2019, could see reimbursement rates to care facilities being slashed by more than half.

Michigan drivers were paying the highest rates in the nation for auto insurance, and insurance companies were pushing for reform too, and then all of a sudden, the new law passed.  “It went through like lightning, and when people describe it as a historic and major overhaul of the law, there’s no overstatement,” said Berg.  “It’s changed everything.”

But maybe not for the better, says Berg.  “The sad thing is that despite all of the talk and all of the hoopla and the promises about this new bill, we still are in the top category in terms of auto insurance premiums, where, according to www.zebra.com, we're still #2.”

Even though premiums dropped an average of 18.41% from 2020 to 2021, Michigan’s average monthly rate of $211 is the highest in the country.

“It seems like an epic fail in terms of the bill itself, because that was the whole point of it,” said Berg.  “To achieve the level of savings that have been associated with this bill by the lawmakers that supported it, you have to sacrifice coverage. For instance, there's a lot of talk about how there is a 45% savings for one bracket under this new law.   But to get that you don't get the same coverage you've had for 20 years, you don't get unlimited medical and a 45% savings.  You get 45% savings only if you're willing to go from unlimited to a $50,000 cap, and you're willing to go on Medicaid.”   Berg said that $50,000 doesn’t go far at the emergency room.

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But what happens afterward is a great concern to many, with the change in fee schedules taking effect July 1^st.   “A great many providers of medical care and especially rehabilitation for spinal cord injury victims and traumatic brain injury victims are going to see a 45% slash off of the amount that they can charge for the very valuable, necessary services that they provide.  On the books, but they're only going to get 55% of that from no-fault, even though they still have to provide the same amount of service and quality of care.”

Berg says that’s going to be devastating for these businesses and ultimately the people who are going to suffer the most from this are the car accident victims who need that kind of care.

One of those victims is Danny Oleksa of Battle Creek.  “Danny was a bright, active 11-year-old when he was involved in a devastating auto accident in 2003. Today, Danny receives around-the-clock care,” said Laurie, Danny’s mother. “The no-fault system has allowed Danny to live at home and stay out of the hospital, but I can’t comprehend my life if I had to provide his care 24/7. There is no way I could give him what his nurses provide, his health would decline drastically.”

Another victim, Dominique Jones, a Battle Creek native who currently lives in a small group home in Mason, is facing a loss of his residency and necessary rehabilitative services.  “A few months after graduating from high school in Battle Creek, I was hit by a semi-truck while riding my bike. At first, paramedics on the scene covered my body with a blanket because they assumed I was dead,” Jones said. “Today, the 24/7 support I receive has allowed me to live more independently. Without a fix to the new law’s fee schedule, I fear that I will lose this progress and the assistance I need. I’d lose my job, access to specialized services, be displaced from my residency and my mental health will deteriorate.”

Part of the reason for Michigan’s auto insurance overhaul was based on insurance company complaints that some medical services were overcharging them when no-fault was paying.  The bill under no-fault might be $3000 where Medicare was charged $800 for the same thing.  But Berg says “No evidence has been put forward to show that they were actually guilty of overcharging.  Inexplicably, they are now subject to this 45% flash in their ability to charge, and what that means is, from a victim's perspective, their buying power is now half of what it was. You're going to have a great many providers who are no longer able to keep their doors open because they can't charge what is necessary for the services they provide.”

Berg says there are bills in the Michigan House and Senate that wouldn’t fix the problem, but might help it.  But he says there’s been no movement on those bills.

Berg’s advice?  If you can afford to keep unlimited coverage, do it.  If you can afford to buy extra liability, do that too.   “If you’re in an accident with someone who doesn’t have unlimited coverage, and you’re found to be even partly at fault, you could be on the hook for their care.”