A famous catcher and left fielder once reportedly said: “It’s like déjà vu all over again.” This is precisely the case with medical coverage under Michigan’s new no-fault auto insurance law.

The new law ends the unlimited medical benefits provision contained in the original 1973 no-fault law and replaces it with tiered premium discounts that allow drivers to pay less for less medical coverage. The law guarantees no premium increases for eight years on the medical portion of insurance premiums and imposes a fee schedule for healthcare providers that begins at about double what Medicare pays.

Michigan’s auto insurance premiums are the highest in the country, with Detroiters often paying $5,000 or more annually. The law precludes insurers from using ZIP codes and credit scores to set rates, numbers that fall disproportionately hard on Detroiters. However, there are loopholes that allow insurers to use “territories,” which can be based on census data and credit reports that track late payment histories.

The Detroit Free Press reported that the Michigan Catastrophic claims Association fee, which covers lifetime medical benefits would dip from $192 per car to $43 per car. There is a likelihood that drivers opting for unlimited coverage would pay substantially more than the current $192 because the number of drivers opting for the top-shelf option would be smaller.
If I’m reading this right, Michigan drivers are trading unlimited lifetime medical benefits at a cost of about $200 per year for coverage that could be as little as $0. Tiers offering savings of, at most, about $150 a year, reduce coverage to a few hundred thousand dollars. That might sound like a lot, but it is no accident that seriously injured patients were at the forefront of opposing this law. Head injuries that often occur in car accidents can cost millions of dollars to treat and can last a lifetime.

If, as Detroit Mayor Mike Duggan and others have remarked, Detroiters could save upward of $1,000 per year, 85 percent of the savings would come from premium increase freezes and loophole-laden geographic and credit rating restrictions.

So, those most affected by predatory and circumstantially high premiums swap unlimited medical coverage priced at $200 a car and sketchy protections against credit and geographic rating for a 20 percent break on premiums.

This echoes loudly of recent Affordable Care Act criticisms that center on reducing premiums.
True, the ACA is laced with problems. The mandate to buy health insurance, after a hard-fought constitutional challenge, ended up being too low to incentivize the young and healthy into buying insurance; the essential benefits requirement that ensured plans covered a realistic and broad range of services created a price spike for those earning more than $40,000 per year, a large slice of the self-employed middle class who buy individual policies.

Still, the ACA addressed a number of longstanding shortcomings in the American health care system. To wit: access to care, comprehensive coverage, insurance buy-in from the young and healthy (which keeps premium costs down) and coverage for pre-existing conditions.

Now, in a nation beset by a medical bankruptcy rate that far and away leads the developed world and runaway healthcare costs, those who would repeal the ACA advocate replacing it with lower premium options that address none of the problems the ACA set out to resolve.

There seems to be a tendency to push for lower premiums at any price, including affordable adequate coverage for those who need it most: the uninsured lower middle class.
Michigan’s auto insurance no-fault rollback features much of this politically expedient myopic perspective.

Perhaps unlimited lifetime coverage was a step too far and reform was needed. But if the real problem—85 percent of it, anyway—was redlining and predatory credit rating considerations, then why offer shaky relief there and take away unlimited medical coverage for $200 per year?