Insurance refund checks don’t fix no-fault reform shortcomings

Four hundred bucks doesn’t go as far as it once did.

It’s about what a typical family of four spends for a couple weeks worth of groceries. Or a car payment. Or a couple of utility bills.

Four Benjamin Franklins would mean quite a bit to many of us.

That’s probably why so many Michiganders were ecstatic to hear the Michigan Catastrophic Claims Association will send about $3 billion of a $5 billion surplus back to insurance customers in our state. The over collection of fees accrued after lawmakers passed a 2019 reform to the state’s no-fault insurance system – changes bandied about for projected car insurance rate reductions they were expected to generate.

It was a well-meaning effort to address our highest-in-the-nation insurance rates. Most folks agree something needed to change to reduce the ridiculously high costs drivers in our state pay for insurance.

But the bills included a number of provisions that dramatically altered how we care for victims of catastrophic crashes in this state – one of the few things our insurance mechanisms seemed to get right.

Today, caregivers and recovery homes that provide services to people who’ve suffered life-altering injuries in crashes are reimbursed about 55 percent of previous rates.

Today, an estimated 18,000 people who were injured prior to the regulatory changes and have been receiving care under the earlier system now face catastrophic cuts in services. We have heard directly from several families since the law took effect in July that their loved ones no longer receive comprehensive care to which their insurance premiums entitled them.

(Cruel irony: many of the people losing care also won’t receive the refund checks because their injuries prevent them from owning and driving vehicles.)

Worse, the cuts in reimbursement rates has caused rehabilitation and care centers statewide to close or drastically alter the services they offer to people whose care is paid for from the catastrophic claims system.

And who could blame them – already facing a shortage of health and rehabilitation care workers, service providers now face reimbursement rates that would cover less than the hourly wages they pay care workers.

We raise this juxtaposition because it’s important. It’s important context through which we all should view the celebratory press releases distributed by state lawmakers and the governor following the MCCA decision to refund the surplus to policyholders.

It’s important for us to recognize that some pretty ugly side effects accompanied those reduced insurance rates and refund payments.

It’s important for us to recognize that the lawmakers who trumpet the refunds have been warned of negative impacts on people who have suffered profound injuries in car wrecks since before the new rules took effect. It’s important for us to recognize that our lawmakers have unfinished business to address damage their work caused to some of Michigan’s most vulnerable residents.

To many Michigan households, those $400 checks signify tangible results of reforms to a broken auto insurance system.

But to far too many, they’re salt tossed onto wounds that our representatives in Lansing seem reluctant to address.

Maybe we should address those injuries before we send celebratory checks.


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