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The House Republican plan would cap Michigan's unlimited personal injury protection coverage at $10 million, reduce reimbursement rates for auto-related injuries, open up the Michigan Catastrophic Claims Association to public scrutiny and create an authority to combat insurance fraud.

(MLive File Photo)

Update: Opponents say House Republican auto insurance plan doesn't save Michiganders enough money

LANSING — A new proposal to change Michigan's auto insurance system would pair a mandatory two-year, 10 percent rate reduction with a cap on personal injury protection coverage.

The proposal also seeks to decrease fraud and provide a low-cost policy for poor people. See details of the plan here.

Michigan House Speaker Jase Bolger, R-Marshall, is expected to announce the proposal during a 3 p.m. press conference.

"While we have the best coverage, we have premiums that are strangling our families," Bolger told MLive. "They cannot afford our auto insurance, they're continuing to talk about the fact that it strangles their household budget, and as a result we see too many drivers who are forced to drive uninsured, and that creates further problems."

Jase Bolger

Michigan is the only state to require unlimited coverage for catastrophic injuries in auto accidents. But its car insurance premiums are among the highest in the nation.

The new House Republican plan would cap Michigan's unlimited personal injury protection (PIP) coverage at $10 million. Previous attempts to institute a cap prompted formation of the Coalition Protecting Auto No-Fault (CPAN), a group devoted to protecting life time coverage.

The new proposal also would reduce reimbursement rates for auto-related injuries, open up the Michigan Catastrophic Claims Association to public scrutiny and create an authority to combat insurance fraud.

Auto insurers would have to reduce premiums by at least 10 percent for a minimum of two years. It also would add a $25 per-policy assessment to fund a health claim tax shortfall.

The measure is different than a 2013 plan announced by Gov. Rick Snyder that would have guaranteed a one-year savings of $125 per vehicle while capping Michigan's unlimited personal injury protection coverage at $1 million and limiting what medical providers charge insurers for auto-related injuries.

Democrats united against that proposal, arguing it didn't guarantee enough savings and would hurt accident victims' quality of care.

Lawmakers have for years tried to reform the state's auto insurance system because of the expensive premiums and a high rate of uninsured drivers.

"This is a cycle that we need to correct," Bolger said. "It's a cycle that's been created by legislative inaction."

The issue has commonly been referred to as no-fault reform, but the proposal would not change anything with the no-fault portion of Michigan's insurance system.

Health care providers and CPAN opposed Snyder's proposal, contending it would reduce health outcomes for accident survivors, shift costs to health insurers and taxpayers, and cause hospitals to lose millions of dollars.

Laura Appel, CPAN member and vice president at the Michigan Health and Hospital Association, said last fall that she'd be open to some changes, such as a high-level limit on benefits, a cap on medical providers' rates, and a new authority to crack down on fraudulent claims. CPAN also expressed interest in discussing appropriate levels of care and ensuring people aren't having too many expensive medical tests performed.

Bolger noted that his proposed $10 million limit would still be 200 times higher than New York's $50,000 limit, which he said has the next highest coverage requirement after Michigan's unlimited plan. New Jersey actually allows varying levels of PIP coverage as low as $15,000, but policy holders still get up to $250,000 for certain catastrophic injuries.

While the new plan wouldn't impact existing patients, Bolger said 99.9 percent of claims haven’t exceeded $10 million. Of those that have, they averaged $12.7 million, he said.

Bolger is optimistic that those claims would come under the cap with added efficiencies in the new proposal.

If someone exceeds the cap, they could use their personal health insurance, Medicaid or Medicare, Bolger said. Patient advocates have traditionally argued that care, especially for traumatic brain injuries, is substandard in those cases.

Under another major piece of the plan, hospitals would accept significantly lower reimbursements from auto insurers in exchange for payment within 30 days. The change is meant to cut back on costly and time-consuming legal battles over coverage and reimbursements. Insurers could still end up paying higher claims if they're not paid within 30 days.

Bolger plans to push separate measures to curb the use of fake policies and caregiver fraud, increase enforcement of current requirements, and waive fines for getting caught with no insurance as long as the driver purchases and maintains coverage.

While he referred to it as a House Republican plan, Bolger said he was not announcing any unanimous support. He's kept the governor and Senate informed of his ideas, and he planned to meet with several Republican and Democratic lawmakers on Thursday to discuss the proposal.

Bolger anticipates some opposition, but said he listened to a lot of the prior objections and addressed many of them in his plan.

"I hope we can provide a solution, but I'm under no illusions that it will be easy," he said. "This is going to be a difficult issue to resolve. So we remain dedicated to working through it, but we'll see where everybody else is in the Legislature and we'll see where the governor is."

Note: Bolger spoke with MLive ahead of his official announcement, which was embargoed. Stay tuned for updates with reactions from stakeholders as they review the proposal.

Email Melissa Anders at manders@mlive.com. Follow her on Google+ and Twitter: @MelissaDAnders. Download the MLive app for iPhone and Android.