Michigan has had no-fault insurance since 1973.  The question is, is no-fault auto insurance to blame for the high cost of our auto insurance in Michigan.

According to the Mackinac Center for Public policy Michigan has:

  • At present, nearly 20 percent of Michigan drivers are uninsured, many because they cannot afford the cost.
  • An estimated 50 percent of Detroit drivers are uninsured, according to 2012 statistics provided by the National Association of Insurance Commissioners.
  • The association reported that the average premium for drivers was $3,400 in Detroit but $1,700 in neighboring communities.

The national average for auto insurance is approximately $1,325 per year, the average cost of auto insurance in Michigan is $2738 per year.  Michigan’s average auto insurance cost is approximately a 107% more than the national average, why?

Well, politicians and automotive insurance analyst believe it is Michigan’s mandatory and unlimited personal injury protection or what is commonly known as PIP. Automobile insurers and many studies believe that the mandate allows Michigan hospitals and other health care providers to charge higher medical care reimbursements for auto crash victims.

In a Michigan Capitol Confidential article Alan Smith, a senior fellow at the R Street Institute, which is a nonpartisan policy research organization and has conducted state-by-state research into automotive insurance is quoted stating:

Michigan doesn’t have the highest auto insurance rates in the country, but unlimited benefits for personal injuries should get them there at some point.  Every other major player in the health care system operates under some form of fee schedule, and this would be helpful, if adopted for Michigan automotive insurance.  Otherwise you will continue to have two Michigan accident victims in hospital beds on the same hall with identical injuries. But the guy who fell down the stairs will be paying half or a third as much per day as the woman whose vehicle contests space with a large tree.

Why does Michigan allow these hospitals and healthcare providers the ability to charge without a fee schedule?  That is a question that I do not have an answer to or can even speculate what that answer could be, it makes no sense to me.

Sen. Marty Knollenberg, a Republican from Troy, introduced Senate Bill 313 last year which would impose price controls on medical services provided by hospitals and doctors to patients covered by PIP.

State representative Jason Sheppard, a Republican from Temperance, is looking to address this high auto insurance in Michigan a different way.  He has a bill he wants to submit this year which would allow Michigan drivers the ability to purchase personal injury coverage in a tiered fashion, with benefit caps of either $250,000 or $500,000.

Being that we will pay $160.00 per year for our current MCCA (Michigan Catastrophic Claim Association) fee this upcoming year I wonder how much that would decrease our auto insurance rate in comparison to the national average.

Gary Wolfram, the William E. Simon professor of Economics and Public Policy at Hillsdale College and a member of the Mackinac Center for Public Policy Board of Scholars was quoted in the article stating:

other states cap PIP insurance at $50,000, including New York, which is second only to Michigan in PIP requirements.  We are the only state with unlimited PIP.  You’d think if it were a net positive, other states would follow suit. But they haven’t.  If I fall off a ladder and injure myself, the type of treatment I’d receive in a hospital would be entirely different from the treatment I’d receive in the same hospital for similar injuries incurred in an automobile accident.

Now with all that said I am still wondering why we even have the MCCA
(Michigan Catastrophic Claim Association) system anymore since we now have Obama/SCOTUS Care.  Since everyone now has healthcare coverage, or at least that is what we were told, by President Obama and all the Democrats that voted for the bill, would happen by this time.  So I say Michigan should cancel the MCCA bureaucracy and refund a large portion of the funds in the account to the Michigan citizens who currently have auto insurance.

Does that sound like a good idea to you?

Let’s talk about this today on The Live with Renk Show which airs Monday through Friday 9 a.m. to noon. To let me know your thoughts during the show please call (269) 441-9595.