As Michiganians know all too well, we pay more for car insurance than anyone else in the country. That’s because in Michigan, our auto insurance serves a dual purpose: it’s both auto insurance and health insurance.
Michigan law requires auto insurance to provide no-fault bodily injury protection, which pays for health care costs resulting from car accidents, regardless of who caused the accident.
This means that every time you pay for that auto insurance premium, you also pay for the health insurance that comes with it.
While recent bipartisan reforms have helped reduce Michigan’s dual liability auto insurance burden, their overall impact has been limited.
On the one hand, new bodily injury protection caps allow beneficiaries to reduce their premiums and differential pricing restrictions based on certain “non-driving factors” such as gender, marital status, level of education, home ownership or credit scores reduce the disproportionate burden on low-income Michiganders that leads to deep racial disparities in access to insurance.
But analysis by the University of Michigan’s Center for Poverty Solutions found that while the reforms led to an 18% drop in insurance premiums in the first year, Michigan auto insurance rates remain the lowest. high in the country – with severe racial disparities in access.
That’s because if we’re serious about tackling Michigan’s high auto insurance rates, we need to decouple auto insurance from health insurance.
And the way to do that is to provide every Michigander with high-quality health insurance.
First, it’s worth dissecting why the auto insurance system is so expensive. Not only are Michigan’s premiums the highest in the country, we also have the second highest rate of uninsured drivers at 25% in 2019, according to the Insurance Research Council.
These problems are mutually reinforcing. The very fact of our high premiums drives down the prices of low-income Michiganders — who are disproportionately likely to be black.
They just can’t afford the premiums. And while recent auto insurance reforms have prevented insurers from discriminating by certain non-driving factors, it still allows them to price by geography.
So in lower-income communities — places like Detroit, Flint and Benton Harbor where more people are uninsured — those who are insured must, in effect, pay for everyone else. This makes it even harder to get insurance.
Given that Michigan is one of the most segregated states in the country, this actually explains why such large gaps in access to insurance persist.
Worse still, the fact that the PIP opens up Michigan auto insurance to some of the highest levels of auto insurance fraud in the nation.
For example, uninjured family members of injured beneficiaries may fraudulently charge auto insurance for their care. In one case, a Lansing-area woman fraudulently claimed she had provided over $15,000 in attendant care services to her injured son.
Michigan’s insanely expensive car insurance is politically intractable. To understand why, follow the money. Health insurance companies support the PIP because it removes expenses related to the payment of accident-related health care from their accounts.
The Michigan Association for Justice, which represents litigators, supports PIP because it funds the payments they earn for their clients. Indeed, the number of personal injury lawsuits has more than doubled over the past decade.
Hospitals support PIP because it reimburses at higher rates than traditional health insurance. It brings money to special interests.
The problem, of course, is that this money doesn’t come from nowhere – we pay for it every month with those exorbitant car insurance premiums that we have to pay just to drive our cars.
They tell us they support the system because it ensures that no one injured in an accident goes without the health care they need. But then, why should we care about how someone hurt themselves to make sure they get the care they need?
By their logic, shouldn’t the industries aligned around Michigan’s no-fault PIP system protection be calling for Medicare for All?
Well, we should be.
Because it’s the best way to deal with the ridiculously high cost of auto insurance and ensure that more people have access to the same high-quality health care, no matter how they hurt themselves.
If we were to guarantee all Michigander health care by offering every Michigander guaranteed health insurance, we could stop requiring auto insurance to duplicate and let it become just auto insurance again.
We would also all have reliable, affordable and portable health insurance.