In 1978, as part of no-fault insurance reform, the Michigan Legislature formed and instituted the Michigan Catastrophic Claims Association, and has direct responsibility. The rationale was to establish a fund which would pay for serious medical injuries which exceeded a certain dollar amount. To properly finance it, a $3 fee (tax) was assessed per vehicle, with ”unlimited” personal-injury benefits for qualified claimants.
The MCCA is overseen by what is now the Office of Financial & Insurance Services and administered by a director and five gubernatorial appointments from among larger Michigan insurance companies.
It’s easy to argue that the MCCA has inherent organizational flaws which need to be addressed. First of all, the MCCA board needs to restructured, as there is currently no public representation. Secondly, meetings are closed to the public. Thirdly, it is immune from the Open Meetings Act and is not required to comply with the Freedom of Information Act. Even the state insurance commissioner ( a non-voting board member) isn’t free to speak about its inner workings.
Today, MCCA currently covers individual catastrophic medical claims, from which only a tiny minority of Michigan drivers ever directly benefit. The state insurance industry generally supports MCCA cost reform, yet our lawmakers have allowed us to remain the only state in the nation to offer the very expensive “unlimited” personal injury benefits. That, alone, should get us all thinking. Either we in Michigan are a lot smarter rest than the of the nation, or we’re being taken for a proverbial ride.
Michigan drivers are currently assessed a “tax-equivalent” of $188.00 annually per vehicle just to fund MCCA, plus any additional “statutory” fees. For families with multiple vehicles, simply do the math. With this as a contributing factor, it should come as no surprise to any of us that at least one-fifth of Michigan drivers are without insurance — reportedly up to 50 percent in some of our major cities. The fact that Michigan has among the highest insurance rates in the nation, and is the only state in the with unlimited medical has an indisputable, direct correlation.
Our own Daily News appropriately calls for no-fault re-examination and reform. Heeding the public cry for MCCA to “open the books” for close scrutiny would expose the extent of cost excesses, and undoubtedly insure public support for a quick end to “unlimited” benefits. Any no-fault reform without medical-costs containment and combating fraud would be futile.
In conclusion, our MCCA unlimited- funding mechanism is, itself, a severely-ill entity which has been unnecessarily hemorrhaging way too much taxpayer money for far too long — with some medical providers charging 2-3-4 times more than normal. In light its overly-generous status, it’s really no wonder that some of the legal and medical coalitions lobby to preserve it. The time is ripe for Michiganders to cast a deaf ear to the self-serving pleadings, and for our Legislature to finally muster the courage to effect meaningful no-fault auto reform. The sooner, the better.
Lou Kitchenmaster is an independent insurance agency owner in the greater Greenville area. He lives in Stanton.
The opinions expressed in the Guest View do not necessarily represent the opinions of The Daily News.