Michigan House’s plan to give drivers the option to opt out of unlimited injury protection coverage would likely lead to incremental increases in Medicaid costs for the state, according to an analysis of the bill by the Tax Agency. of the Senate.
As passed, House legislation, House Bill 4397, would allow drivers to choose from five levels of personal injury protection, or PIP, coverage options: Unlimited, $500,000, $250,000, $50,000 and a full opt-out option for people with health insurance that covers traffic accidents.
In a financial analysis of the bill, the nonpartisan Senate Tax Agency concluded that some of the costs incurred by accident victims without unlimited coverage would be passed on to their current primary insurers, whether covered by commercial insurance, Medicare or Medicaid.
Long-term cost changes could vary depending on how many people choose to continue purchasing unlimited PIP coverage. Based on existing data from the Michigan Catastrophic Claims Association, the Senate Tax Agency projected that the state’s share of Medicaid costs could increase by $65.9 million over a ten-year period, and that the rate of growth would eventually slow down thereafter.
Other potential costs to the state include the loss of $15 million to $20 million a year in revenue from the 1.25% tax on state insurance premiums due to lower insurance rates. insurance, and additional administrative costs for the Department of Insurance and Financial Services and the Michigan State Police, the agency found.
Under the bill, an auto insurance fraud task force would be created within the Michigan State Police to collect and investigate insurance fraud claims and provide annual reports. in the legislature.
The House bill would require insurers to reduce PIP rates from 10% for unlimited coverage to 100% for full exclusions for five years, after which point rates would be subject to prior approval by regulators. state instead of the current system that allows rate increases to take effect before the review.
House Republicans estimated drivers could save between $120 and $1,200 for a driver paying $2,400 a year under the plan, and hailed the plan as much-needed relief for Michigan residents.
A potential overhaul of Michigan’s existing no-fault auto insurance policy came to the fore last week when the House and Senate passed versions of auto insurance reform plans in the space of two days.
There are some variations between the House and Senate versions, but House Speaker Lee Chatfield, R-Levering, and Senate Majority Leader Mike Shirkey, R-Clark Lake, said last week that they planned to work on these differences.
Whitmer told reporters she would not sign the House or Senate bill as written, noting that she would veto legislation that did not provide strong consumer protections and financial assistance.