Abdul El-Sayed: Stop making auto insurance double as health insurance – Crain's Detroit Business

As Michiganders know all too well, we pay more for auto insurance than anyone else in the country. That’s because in Michigan, our auto insurance does double duty: it’s both auto insurance and health insurance.

Michigan law requires auto insurance to offer no-fault personal injury protection, which pays for health care costs resulting from car accidents regardless of who is at fault in the accident.

That means that every time you pay that auto insurance premium, you’re paying for the health insurance that comes with it, too.

While recent bipartisan reforms have helped to reduce the burden of Michigan’s double-duty auto insurance, their overall impact has been limited.

On one hand, new personal injury protection caps allow beneficiaries to reduce their premiums and restrictions on differential pricing according to certain “nondriving factors” like sex, marital status, education level, home ownership, or credit scores reduce the disproportionate burden on low-income Michiganders that leads to profound racial disparities in insurance access.

But an analysis by the University of Michigan Center for Poverty Solutions found that while the reforms led to an 18 percent decline in insurance premiums in the first year, Michigan auto insurance rates remain the highest in the country — with severe racial disparities in access.

That’s because if we’re serious about addressing 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 high quality health insurance.

First, it’s worth dissecting why the auto insurance system costs so much. Not only are Michigan’s premiums the highest in the country, but we also have the second highest rate of uninsured drivers at 25 percent in 2019, according to the Insurance Research Council.

Those problems reinforce each other. The very fact of our high premiums prices out low income Michiganders — who are disproportionately likely to be Black.

They simply can’t afford the premiums. And though the recent auto insurance reforms blocked insurers from discriminating by some nondriving factors, it still allows them to set prices by geography.

So in the lowest-income communities — places like Detroit, Flint, and Benton Harbor where more people are uninsured — those who are insured have to, in effect, pay for everyone else. That makes it even harder to afford insurance.

Given that Michigan is one of the most segregated states in the country, this effectively explains why such major gaps in insurance access persist.

Making matters worse is the fact that PIP opens Michigan auto insurance to some of the country’s highest levels of auto insurance fraud.

For example, uninjured family members of injured beneficiaries can fraudulently bill auto insurance for their care. In one case, a Lansing area woman fraudulently claimed she provided over $15,000 worth of attendant care services for her injured son.

Michigan’s obscenely expensive auto insurance is politically intractable. To understand why, follow the money. Health insurance companies support PIP because it takes the expenses of paying for accident-related health care off their books.

The Michigan Association for Justice, which represents trial lawyers, supports PIP because it funds the payouts they win for their clients. Indeed, the number of personal injury lawsuits have more than doubled over the past decade.

Hospitals support PIP because it reimburses at higher rates than traditional health insurance. It makes special interests money.

The problem, of course, is that that money doesn’t come out of thin air — we pay for it every month in those sky-high auto insurance premiums we have to fork out simply to drive our cars.

They tell us that they support the system because it assures that no one injured in an accident goes without the health care they need. But then, why should we care how someone got injured to assure that they get the care they need?

By their logic, shouldn’t the industries aligned around protecting Michigan’s no-fault PIP system be clamoring for Medicare for All?

Well, we should be.

Because it’s the best way to address the absurdly high cost of auto insurance and make sure that more people have access to the same high-quality health care regardless of how they get injured.

If we were to guarantee every single Michigander health care by offering every single Michigander guaranteed health insurance, we could stop requiring auto insurance to do double duty, and let it go back to simply being auto insurance again.

We’d all have reliable, affordable, portable health insurance, too.