Michigan Republicans and Whitmer move closer to no-fault auto insurance deal

May 24, 2019: Bipartisan Michigan auto insurance deal reached between Whitmer, GOP

Republican legislative leaders say they have made progress with Gov. Gretchen Whitmer’s administration toward a deal to reform Michigan’s unique-in-the-nation no-fault auto insurance system.

Talks are expected to continue over the weekend as Republicans seek to bring Whitmer, a Democrat, on board to sign GOP-sponsored bills that would, among other changes, allow drivers to completely opt out of buying personal injury protection, or PIP, coverage in their car insurance policies.

Yet in a sign that a deal is not yet ready, Whitmer told reporters Thursday she has to “draw the line” at no PIP coverage, adding that she will veto legislation if contains that provision.

The GOP-led Legislature on Thursday held off on sending one of two identical bills in the House and Senate to Whitmer’s desk — a move that at this point would force her veto — saying that negotiations among policy staffers on both sides are proceeding in good faith. Legislators will reconvene Tuesday, when they again could take up no-fault reform.

In recent days, Whitmer’s team presented options “that actually move in a direction that we can have some optimism that we can get to a bill signing in the not-too-distant future,” Senate Majority Leader Mike Shirkey, R-Clarklake, told reporters Thursday after a joint caucus meeting of House and Senate Republicans.

“From day one, our goal was to do exactly that,” Shirkey said. “I’m more optimistic today than I have been in the last two weeks that we can accomplish that.”

Shirkey and House Speaker Lee Chatfield, R-Levering, are trying to accomplish what previous Legislatures have been unable to do — reform Michigan’s auto insurance system in an effort to lower car insurance rates across the state.

Michigan is the only state in the nation that requires drivers to buy unlimited, lifetime medical coverage with their car insurance policy. The bills the Senate and House adopted last week would offer drivers the choice of different tiers of PIP benefits, including the current unlimited level but also allowing people to opt out of PIP altogether if they have other health insurance.

The House also added language introduced by Democrats, which this week was added to the Senate version, that requires insurers to reduce drivers’ PIP rates for five years and that prevent auto insurers from using non-driving factors to determine rates once state insurance regulators identify those factors as part of a study Whitmer ordered last month.

In addition, the bills would limit the amount that medical providers could charge for care related to auto injuries to the same rates set for workers’ compensation.

Groups that lobby on behalf of auto insurers and the health-care industry have both cited problems with the bills as drafted — among them, the requirement that insurers reduce rates and the proposed medical cost caps, respectively.

Whitmer, speaking to reporters Thursday morning after touring a brain injury rehabilitation facility in East Lansing, said she is open to discussing other tiers of personal injury benefits, including a proposed $250,000 limit.

But she rejected the idea that people be allowed to completely opt out, adding that doing so could increase uncompensated care for medical providers sought by people who have maxed out their PIP benefits, and shift the cost burden to Medicaid, the government health insurance program for the poor.

Her concern is not unfounded.

Related: Michigan inches toward no-fault deal, as Whitmer remarks add to optimism

The nonpartisan House Fiscal Agency, in its analysis of the House bill, estimated that state Medicaid costs would increase to the tune of $2.5 million in the first year and roughly $72 million within a decade. That’s in large part associated with people who require long-term and home-based attendant care, which Medicaid and auto insurance cover but private health insurance does not, the fiscal agency wrote.

The nonpartisan Senate Fiscal Agency’s estimate of increased state general fund spending on Medicaid as a result of the House bill was similar, at about $65.9 million after a decade — though it noted that it’s difficult to estimate with any certainty.

“Zero coverage is not a real option,” Whitmer said. “Everyone needs to buy into the system at a certain level. There is, I think, a lot of talk about different levels (of coverage), and that’s fine. But a complete zero-coverage option just shifts the burden onto the taxpayers in a different form, which is Medicaid.”

Shirkey and Chatfield told reporters Thursday that they didn’t think the governor should draw “lines in the sand” on legislation as negotiations continue, but they said they remain committed to working with her administration on a compromise.

Shirkey said the administration in recent days showed movement toward some PIP coverage choices, as well as medical cost controls.

“Those are two big things,” he said.

Whitmer told reporters that zero PIP coverage is the “most glaring problem” with the bills, and has gotten the sense from the Legislature that there is willingness to work on strengthening a ban on non-driving factors and guaranteeing lower rates in the long term.

Her top priority, however, is to get a long-term road-funding deal signed into law. House and Senate Republicans have not yet presented their plans to address what Whitmer’s administration and independent experts have pegged as a more than $2 billion need to fix roads and bridges across the state.

Whitmer has called on GOP leaders to send her a budget that fixes roads as soon as possible, but has not directly said she will tie an agreement on no-fault to a roads deal.

Spokeswoman Tiffany Brown told Bridge Whitmer is open to treating them as separate issues, but “if there was an opportunity to do something to lower rates concurrently or in conjunction with the budget that gives motorists greater relief, (then) she would be open to it.”

Shirkey said the two issues are separate and “I’m convinced we’re going to get it done one way or the other, sans a roads conversation.”

While a few Democrats sided with majority Republicans in voting for the House auto insurance bill, most Democrats opposed the legislation. They contend the language doesn’t explicitly prevent auto insurers from using factors such as gender, ZIP code and credit score — factors they say don’t predict that a person is a risky driver — nor prevent insurers from raising premiums in another part of an auto policy to offset cuts to PIP.

House Democrats on Thursday said they plan to introduce legislation they say will guarantee rate cuts of 40 percent off drivers’ total auto insurance premiums, not just PIP; allow seniors to opt out of personal injury coverage because they are eligible for Medicare; and end the use of non-driving factors that they say has contributed to redlining, primarily in Detroit, a poor city that has the highest rates in the nation.

Democrats’ plan also would preserve Michigan’s unlimited medical coverage and not offer other benefit tiers.

Democrats were not included in negotiations about the no-fault bills, and were left out of the drafting of the House plan last week despite assurances from Republican leaders that a special committee Chatfield created this term would come up with a bipartisan auto insurance reform proposal.

“Insurance companies charge us because of where we live,” Rep. Sherry Gay-Dagnogo, D-Detroit, said at a news conference Thursday. “They charge us because of our education attainment level, marital status, gender, credit score, homeownership status and other factors that have absolutely nothing to do with how well we drive. Yet the proposals we’ve seen put forth by the House and Senate Republicans do absolutely nothing to address these discriminatory factors.”

Chatfield told reporters that while he hasn’t reviewed House Democrats’ proposal in detail, lower rates can’t be guaranteed without providing different levels of coverage for PIP benefits.