Michigan No-Fault Law has recently come under heavy scrutiny by republican lawmakers claiming that reform is required to stave off insolvency to the Michigan Catastrophic Claims Association Fund. As a reminder, the MCCA fund is created through residents taxes and is responsible for paying injured car accident victims’ medical expenses once the medical costs rise over $500,000. Your own insurance currently covers the cost of medical expenses up to this $500,000 amount.
Just today, the MCCA announced a rate increase of 6%. Last year they increased rates by $30/per insured vehicle and this 6% increase equals roughly another $11/per insured vehicle. The MCCA claims that this increase is meant to fight the rising costs of Michigan’s unlimited lifetime medical expenses, but there is not one shred of proof showing these increases are necessary or how they are even calculated. Is it just a coincidence that the MCCA decided to increase rates during talks of no-fault reform??? Think again……
This is clearly a scare tactic used to create fear that Michigan residents will pay EVEN more if we don’t do something drastic. If this insolvency or shortage of fund was real they would be more than happy to share that information. The very fact that they are unwilling to disclose any financial information should be telling by itself! The fact of the matter is that they are raising rates just to scare residents and we have absolutely no way of finding the REAL TRUTH. This “major situation” could easily be fixed if we would just have the facts, but instead they are appealing the decision that they have to comply with the freedom of information act. Is this something that a normal company/person would do when facing bankruptcy??? Major corporations are required to publicly disclose balance sheets, income statements, statements of cash flows, and more. Do Insurance companies have this sort of oversight? The short answer is no even though these insurance companies are banking billions of dollars. The only way to have a positive informative discussion on the current status of no-fault and the MCCA is for them to disclose rate calculations and how much is left is the fund. That would just make too much sense, why would we actually want to fix the underlying problems.
A new bill was just introduced that is attempting to cap medical expenses at $50,000. We would go from unlimited lifetime medical benefits to $50,000. If you or someone you know has had surgery or been in an auto accident you know just how quickly this will be exhausted. What is someone to do when your medical expenses go past this amount? Well they don’t want to talk about that. In most states you’d be able to sue the other driver responsible, but in Michigan your ability to sue the other driver is extremely difficult and even harder too prove in a court of law.
If lawmakers really want to cap medical benefits at $50,000, they are severely limiting your ability to get medical expenses paid and there is no talk of changing the injury threshold for making a 3rd party lawsuit. Currently, you must prove that your injury is a serious impairment of a bodily function in order to sue the negligent driver instead of your own insurance company. In states without no-fault there is no such restriction. If Michigan is going to cap first party benefits (medical expenses) and not change or increase your ability to sue the driver at fault, then there is no point to keeping no-fault. We would be much better off with an at-fault system, which is unfortunate, but it is the harsh reality.
The insurance companies don’t want to change to an at-fault insurance system because they would make LESS money. It’s much easier to cap your benefits and limit your ability to sue the negligent driver. They limit their own risk to pretty much zero while increasing profits, not exactly fair to the residents paying the highest premiums in the country. This way they don’t have to hire a lawyer to fight most of these cases and actually pay when they are required. Take some time to inform yourself about this Michigan no-fault reform, it really could change your life forever.