ANN ARBOR – Legislation
allowing Detroit to contract with insurers to provide lower-cost auto insurance
coverage to its residents with a limit on medical benefits of $250,000 for
critical care cleared the Senate Insurance Committee on Wednesday and was
broaden to enable several other cities to start a similar program.
Under the
substitute adopted for SB
288
, Detroit Mayor Mike Duggan, who made
the concept a major piece of his 2013 mayoral campaign, projects that
Detroiters could pay $1,000 less for auto insurance than they would now. Duggan
said most estimates put the proportion of motorists driving without insurance
in Detroit at slightly more than 50 percent.
Duggan said
his administration will release an actuarial study next week on the question of
how much savings it would bring and how many not currently buying insurance
would do so. The expectation is to increase the number of those insured by 10
percent, Duggan said.
“It
changes a lot of people’s decision point,” he said of whether the $1,000
savings would prompt a large number of uninsured to buy insurance.
The
committee reported the bill 5-3 with Sen.
Bert Johnson (D-Highland Park) joining four Republicans in support. Sen.
Wayne Schmidt (R-Traverse City) joined the other two committee Democrats in
opposition. Sen.
Jack Brandenburg (R-Harrison Township) was absent.
Johnson’s
vote was key, and he acknowledged during the committee meeting he has resisted
a low-cost, low-coverage option for some time.
An amendment
Johnson sponsored changed the threshold for a city to qualify from having at
least 50 percent of its residents operating a motor vehicle without auto
insurance to at least 35 percent. There was no official word on what cities
would then qualify, but Johnson said he anticipated virtually every urban city
would qualify. It would be up to those cities to decide whether to participate.
He listed
Pontiac, Romulus, Inkster, River Rouge, Highland Park and Muskegon Heights as
examples. Sen.
Ken Horn (R-Frankenmuth) said he expected Saginaw would qualify and some
said Kalamazoo would qualify, too.
The bill,
however, has opposition from critics who say $250,000 would provide nowhere
near enough coverage for those suffering serious or catastrophic injuries in a
traffic crash. Under the bill, once a patient hits the $250,000 level for
critical care, their health insurance would then handle coverage of care,
though, depending on the type of coverage, that could leave the patient with
enormous medical bills he or she would not now have to pay under the Michigan
Catastrophic Claims Association system.
Johnson said
last year there were eight traffic crashes involving Detroit residents where
the cost of medical care exceeded $250,000.
“That’s
not to say that’s a small enough number to look past what the exposure is, but
it puts it in perspective a little bit,” he said.
Johnson also
signaled he is not quite a lock to vote yes on the bill when it comes up on the
Senate floor, saying further discussions on topics, such as attendant care,
would be beneficial. But he said he agrees with the intent of the bill to make
auto insurance “affordable for people so they can be within the boundaries
of the law and not made scofflaws.”
That was a
point Duggan hammered as well.
“You
basically say to the residents of Michigan today, you either buy the most
expensive insurance in America or you’re a criminal if you drive,” he
said. “What we’re doing is giving people a middle position.”
Virgil Smith (D-Detroit), the bill sponsor, watched the proceedings from
the side of the committee room on the first floor of the Farnum Building. Smith
lost his position on the committee after he was charged with multiple felonies
in an incident where he allegedly shot up his ex-wife’s vehicle. It was the
first time Smith has spoken publicly on legislation since that incident.
He called
the new version of the bill, which is significantly different from the one he
introduced, “a good first step.”
Opponents of
the bill were relatively quiet Wednesday. The Michigan Association for Justice
registered its opposition to the bill.
Vince
Consiglio, president of ABATE of Michigan, a motorcycle advocacy group, said
the $250,000 level is too low. He said a Livingston County couple who lost
their legs in a traffic crash had health care needs of more than $2 million.
Another
amendment, sponsored by Horn, requires those purchasing the lower-cost policy
to sign a waiver that they understand their policy would not contain standard
no-fault insurance benefits. The committee adopted it easily.
This story
was published by Gongwer News Service. To subscribe, click on www. Gongwer.com
