Capitol News

October 8, 2017

The fall legislative session is well underway. This is the time for major legislation to be considered before 2018 when electoral politics will heavily influence everything at the Capitol.

AUTO NO-FAULT

Two competing auto no-fault insurance reform plans were introduced in September. Michigan has the highest auto insurance rates in the nation, largely because we are the only state with unlimited lifetime medical and related coverage for injuries caused by auto crashes. Michigan adopted auto no-fault insurance legislation in 1973 to take litigation out of the claims resolution process. In some areas of the state, such as Detroit, rates are so high that many people drive without insurance so there is considerable sentiment to lower rates by changing the law, especially by controlling fraud and rising medical costs.

Bipartisan Package — A bipartisan “Fair and Affordable No-Fault Reform” legislative package was announced by a group of 15 State House members on September 14. Rep. Ben Frederick (R-Owosso) and Rep. Donna Lasinski (D-Scio Township) are chief sponsors of this particular effort to preserve the state’s no-fault coverage while reducing costs. The Fair and Affordable No-Fault Reform legislation would:

  • Rein in medical costs related to auto injuries by setting a fee schedules of 185 percent of the Workers Compensation rate and set attendant care limits that accommodate the nature of a person s injury;
  • Stop non-driving related factors such as credit score, gender and job title from unfairly impacting auto insurance rates;
  • Bring transparency to the Michigan Catastrophic Claims Association by making its ratemaking data available to the public;
  • Aggressively tackle fraud and claims handling abuse by creating a state fraud authority.

Leonard/Duggan/Theis Bill — On September 26, HB 5013 sponsored by House Insurance Committee Chair Rep. Lana Theis (R-Brighton) was introduced at a press conference featuring Speaker of the House Tom Leonard (R-DeWitt), Detroit Mayor Mike Duggan, a Democrat and former CEO of the Detroit Medical Center and both Republican and Democratic House members.

HB 5013 would, beginning July 1, 2018:

  • Allow an insured person to select one of three personal injury protection, or PIP, coverage levels: $250,000 ($225,000 emergency medical, $25,000 for everything else); $500,000; or unlimited.
  • Allow a “qualified person” — a person who is at least 62 years old and has lifetime health benefits—to opt-out of purchasing PIP coverage, and require an insurer to offer a reduced insurance premium rate for a person who opted-out.
  • Encourage a premium rate reduction of 40 percent for the $250,000 coverage level and drivers would not be required to pay the $170 per vehicle Michigan Catastrophic Claims Association fee.
  • Limit paid attendant care in the home to 56 hours per week.
  • Set maximum reimbursement rates to medical providers for PIP benefits as follows: 125% of the Medicare rate for emergency services, 100% of the Medicare rate for all other services, and no more than the average amount received by the provider in the last year if Medicare does not provide a rate for the service.
  • Create the Michigan Automobile Insurance Fraud Authority (MAIFA),
  • Allow the state to regulate rate increases for 5 years.
  • Other administrative reforms.

Proponents told reporters HB 5013 would lead to an average decrease in auto insurance premiums of 20 percent for drivers. Older drivers could save up to 32 percent while drivers without collision or theft coverage could save up to 50 percent over current premiums.

The House Fiscal Agency Analysis states that HB 5013 could reduce state revenues by an estimated $5-$10 million per year and could create increased costs for Medicaid by an estimated $150 million per year after 10 years. This is because those who choose reduced coverage, have a catastrophic accident, and do not have private adequate health insurance, long-term care insurance or resources to pay health care, rehab and other associated costs typically spend down their assets and go on Medicaid.

Opting Out — Apparently the other 49 states permit auto insurance to coordinate or be secondary to Medicare or other health insurance. The proposals so far do not guarantee any specific, long term rate reduction for Medicare recipients. Over 18 percent of Michigan drivers are 65 or better. Over 14 percent of the claimants serviced by the Michigan Catastrophic Claims Association are individuals who were 65 years or older at the time of their accident.

Both of the legislative proposals infer that Medicare is adequate health insurance coverage for auto accidents. Currently, the proposed federal budget by the U.S. House would voucherize Medicare and shift more cost to Medicare patients so Medicare itself is increasingly under attack and its future is problemmatic.

Medicare currently does not cover a large number of services that are compensable under no-fault auto insurance in Michigan. As a result, Medicare patients choosing to opt out of PIP may not have the necessary access to services or the intensity and duration of services needed to maximize their recovery from an auto accident. Some examples of services or benefits needed after a serious auto accident:

  • Skilled nursing care after discharge from a hospital — Medicare pays for 100 percent for 20 days, 80 percent for 80 days. There is no coverage for skilled nursing care after 100 days often leaving families with large financial burdens and potential bankruptcy;
  • Wage loss replacement for Medicare recipients who still are working.
  • Adequate reimbursement for ambulance, ER, ICU and acute care as well as in-patient rehabilitation;
  • Transportation services, vehicle modifications, or devises for assistive driving controls that assure accessibility for people in wheelchairs or with other post-accident limitations;
  • Replacement services such as help with housekeeping, meal preparation, and other household responsibilities like driving to doctor s appointments or events, house or garden chores that the person would normally be able to perform;
  • Coverage for physical, occupational, or speech would be limited to the acute episode and no coverage for therapies for chronic ongoing problems arising from the motor vehicle accident;
  • Assistive, or adaptive equipment, to help compensate for physical or cognitive deficits, for example - watches or alarms to help with memory loss;
  • Socialization therapies - used to reduce emotional pain, depression, or anxiety frequently associated with injury trauma resulting from the motor vehicle accident;
  • Alternative pain management therapies;
  • Communication assistive devices, such as iPad or computer with voice recognition software;
  • Specialists (orthopedic, plastic surgeons, neurologists, psychologists, or vestibular specialists) as many do not participate in Medicare;
  • Behavioral counseling or therapists for patients, caregivers and their families;
  • Case management services;
  • Recreational therapy to assist those now in wheelchairs or other traumatic injuries to help them to engage in activities they participated in prior to their injury;
  • Residential treatment centers;
  • Professional home care giving services — family would need to provide care without compensation.

Because of these deficiencies in the opt-out provision, the SERA Coordinating Council Executive Board voted to oppose HB 5013 as introduced.

CSC APPROVES COLLECTIVE BARGAINING CHANGES

At its standing room only September 20 meeting, the Michigan Civil Service Commission approved sweeping changes to the collective bargaining system for state employees. This is important for state retirees since the bargaining units for active employees represent active state employee and state retiree interests at the bargaining table with regard to health, dental, and vision benefits. By state law, state retirees pay the same health care premiums as active employees and the plan design is quite similar between active employees and retirees.

The Coalition of State Employee Union members and SERA testified against the measures. The Michigan Chamber of Commerce and the Mackinac Center testified in favor. The proposed changes would not take effect until January 1, 2019 when currently approved labor contracts expire.

LEGISLATION UPDATE

Pension Tax Fix for Police and Fire — HB 4396 sponsored by State Rep. Joseph N. Bellino, Jr. (R-Monroe) would amend the Michigan Income Tax Act to extend to a person who was born after 1952 and retired as of January 1, 2013, an increased deduction for retirement or pension benefits from governmental employment that was not covered by Social Security. And the bill would allow a taxpayer to deduct from adjusted gross income pension benefits, as well as retirement benefits, received for service in the United States armed forces. The bill was passed by the House last June and was reported out the Senate Finance Committee for full Senate consideration on September 19.

Disinherit a Child — Currently, a person may expressly disinherit a child (other than a minor child or child who is a dependent) in a will. Recently, however, a Michigan Court of Appeals case ruled that disinheriting a child in a will does not limit that child’s right to make a claim to exempt property. Exempt property refers to property such as jewelry, cars, or cash that is protected from creditors; the amount that may be protected is established in statute and currently is about $15,000. Thus, a disinherited child may make a claim against certain personal property up to the amount protected in statute from creditors. HB 4410 sponsored by Rep. Peter Lucido (R-Shelby Township) would amend the law to allow a decedent (either in a will or by other signed writing) to expressly exclude or limit the right of a child who is not a minor or the decedent’s dependent from making a claim to any of the exempted property for which the child would otherwise have a right. The bill was reported out of House Judiciary Committee on September 26 and awaits full House consideration.

State Rules — HB 4205 sponsored by Rep. Triston Cole (R-Mancelona) would prohibit state agency rules from being more stringent than federal regulations. The bill passed the House in May and was reported out of the Senate Oversight Committee on October 5 for full Senate floor consideration. Reportedly the Governor is not in favor of this bill.

Prescription Limits — Generally, a pharmacist may only dispense a drug or device to a patient in the quantity ordered by the prescriber on the patient’s prescription. If the prescription does not contain the quantity ordered, the pharmacist must consult with the prescriber to determine an agreed-upon quantity, record that quantity on the prescription, and maintain that documentation as provided under the Code. In situations where the quantity is not written, SB 360 sponsored by Sen. Margaret O Brien (R-Portage) would allow a pharmacist, after consulting with the patient, to use her professional judgement to dispense a quantity of the prescription. However, this provision does not apply in the case of a prescription for some controlled substances. This will eliminate a phone call from the pharmacy to doctor s offices and delays in filling prescriptions. The bill passed the Senate in June and was reported out of House Health Policy Committee on September 27 for full House consideration.

BALLOT PROPOSAL UPDATE

Redistricing — The ballot proposal to end gerrymandering in Michigan which has been endorsed by the SERA Executive Board reports that it has collected over 200,000 voter signatures of the 400,000 it is hoping to gather. Michigan SERA Executive Board encourages its chapters and members to get involved by inviting a speaker from the ballot committee Voters Not Politicians to chapter or other meetings. Members can volunteer to help collect signatures this fall by signing up at the Web site. Information is available at www.votersnotpoliticians.com.

Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail michigansera@comcast.net.

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