UPDATED Thursday at 1:30 p.m.: Michigan Gov. Gretchen Whitmer isn't embracing a Republican-passed plan to cut high auto insurance premiums, saying it falls short and that her first priority is passing a budget that fixes the state's roads.
The Democrat's spokeswoman, Tiffany Brown, issued a statement following the passage of legislation during a state House session that stretched into Thursday. The state Senate also approved a car insurance overhaul this week.
Both bills would no longer require drivers to buy unlimited medical coverage for injuries, if people have other health insurance. The House plan would require insurers to reduce a portion of premiums.
Brown says Whitmer is only interested in signing insurance legislation that's "reasonable, fair and provides strong consumer protections and immediate financial relief," and neither bill meets that standard.
Republicans counter that residents are demanding lower premiums.
UPDATED Thursday at 8:00 a.m.:
The Republican-led Michigan House early Thursday approved a plan to reduce the state’s high auto insurance premiums, moving to no longer require that drivers buy unlimited medical benefits through their car insurer to cover crash injuries.
The move set the stage for a potential showdown with Democratic Gov. Gretchen Whitmer, who threatened to veto separate auto insurance legislation that cleared the GOP-controlled Senate earlier in the week. The top House Republican said he hoped to soon reach a compromise with senators and the governor.
“The goal here is to get a signature by the governor and deliver rate relief for the people of our state. We’re going to have the conversations that are necessary to make that happen,” said Speaker Lee Chatfield of Levering.
The House bill — which passed 61-49 on a largely party-line vote after 2 a.m. — would let motorists forego mandatory unlimited personal injury protection, a requirement only in Michigan.
Insurers would have to cut PIP rates, for five years, by between 10% and 100%, depending on the coverage chosen. That could equal an estimated $120 and $1,200 in savings for someone paying $2,400 annually per car, assuming the PIP fee accounts for half their bill, according to Republicans’ projections.
A recent study showed that Michigan’s estimated annual premium of $2,610 is highest in the country and almost double the national average.
“It affects the people who live in every one of our communities. We have been overpaying for decades, and people are demanding a change,” said Rep. Jason Wentworth, a Clare Republican.
While the House vote was a big step forward in efforts to cut premiums after years of legislative stalemates, the bill’s prospects were uncertain. Majority Republicans have made car insurance changes their top priority, but Whitmer has been more focused early in her term on trying to fix the roads with a proposed fuel tax increase as part of her first budget.
Many of her Democratic allies in the House blasted the insurance legislation, and criticized how it was unveiled and approved within a matter of hours with no public review or committee testimony.
“If our constituents are angry now about their insurance rates, imagine how angry they’ll be when they realize that with the bill before us at it stands, their rights and benefits have been taken away — given away — and our rates haven’t really been lowered,” said Rep. Donna Lasinski of Washtenaw County’s Scio Township.
Under the measure, people opting out of unlimited medical coverage and instead choosing between $0 and $500,000 in benefits would not have to pay much of what will soon be a $220 annual per-vehicle fee that reimburses auto insurers for expenses surpassing $580,000 for the severely injured.
The bill would stop car insurers from having to pay much more than private and public health insurers do for the same medical services, a factor driving claim costs. They would follow a fee schedule similar to what exists for workers’ compensation injuries.
The legislation also would direct state insurance regulators to write rules banning the use of non-driving factors if there is no “rational correlation” with insurance losses.
Democrats said the measure is flawed. They contended that a prohibition on the inclusion of credit scores or other non-driving elements in the rate-setting process should be explicitly written into the law, and they said insurers could still hike rates in the long term.
“The insurance companies got a gift today,” said House Minority Leader Christine Greig of Farmington Hills.
After the five-year period of mandated lower premiums, Michigan would scrap a file-and-use system that lets rate increases take effect before regulatory review. Rates instead would be subject to prior approval.
The bill would also create a task force to target fraud, limit reimbursement for family attendant care and no longer let insurers use sex as a rating factor when pricing policies issued on a group basis.
Three of 52 Democrats joined all 58 Republicans to vote yes.
Reaction from key players in the auto no-fault system was mixed.
The Insurance Alliance of Michigan, an industry group, said the legislation addresses major culprits of a “broken” system such as overcharging by medical providers and a lack of consumer choice. But it expressed “serious concerns” that the House, unlike the Senate, added “arbitrary rate and regulatory mandates.”
The Michigan Health & Hospital Association said the bill “stinks,” and it urged the Legislature to start over.
Chatfield said the fact that the insurance and health industries are “uncomfortable” with parts of the legislation indicates “we have struck an excellent balance.”
UPDATED Wednesday at 8:00 p.m.:
The Michigan House is moving to quickly pass its own overhaul of the state's auto insurance system a day after a plan was approved by the Senate.
In a surprise move, House Republicans are planning to consider the legislation Wednesday night. A committee has held hearings on the issue, but a bill has yet to be proposed.
The pending measure is expected to call for eliminating Michigan's one-of-a-kind requirement that people buy unlimited medical coverage from their car insurer for crash injuries. Instead, motorists could choose lower levels of coverage.
Michigan has the highest average premiums in the country.
Democratic Gov. Gretchen Whitmer has threatened to veto fast-tracked legislation that won mostly party-line passage from the Senate, saying it would not guarantee rate cuts or address discriminatory rate-setting practices.
