Study: Insurance cap bad idea
Last Updated: September 06. 2011 1:00AM
Study: Insurance cap bad idea
State Senate bill would limit injury benefit in auto policy
Paul Egan/ Detroit News Lansing Bureau
Lansing— Allowing personal injury benefits to be capped under Michigan’s no-fault auto insurance law would have “potentially disastrous economic impacts,” according to a study to be released today.
The Coalition Protecting Auto No-Fault is to release a study prepared by the Anderson Economic Group that examines the potential impact of a bill with bipartisan support before the Michigan Senate.
Sponsored by Sens. Joe Hune, R-Whitmore Lake, and Virgil Smith, D-Detroit, the bill would allow drivers to cap injury and rehabilitation benefits at levels as low as $50,000. Today’s coverage provides for unlimited benefits.
“It’s a major shift in cost to taxpayers, because it shifts the cost to Medicaid,” said John Truscott of Truscott Rossman, which represents the group.
The change also would be bad for nursing homes that provide long-term medical care, Truscott said.
Peter Kuhnmuench, executive director of the Insurance Institute of Michigan, said the bill allowing for caps and a companion bill that would subject medical services to a fee schedule would allow for reduced premiums.
“Their concern is its impact on the health care delivery system, because it’s going to put some cost constraints in the system,” Kuhnmuench said.
He said only 6 percent of claims involve personal injury benefits greater than $50,000, and an even smaller percentage would involve Medicaid because many of those claimants would have other insurance that could be used once the cap was reached. Still, the institute would support a cap somewhat higher than $50,000 if that’s what lawmakers want, he said.
Gov. Rick Snyder recently said any repeal of Michigan’s motorcycle helmet law should be considered in combination with other possible tweaks to the no-fault system.
The governor’s spokeswoman, Sara Wurfel, could not say Friday whether Snyder supports the proposed benefits cap.
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