MI auto insurance regulator on care industry collapse: “We can't change the law, but I'm not going to sit on my hands.”
Michigan's new auto insurance law allows insurance companies to cut payments for accident survivors' long-term care by 45% from what they were paying in 2019.
Since that change went into effect in July, dozens of home-care companies have shut down and many more say they’ll be closing soon.
There have been multiple protests in Lansing about the change.
The Michigan Department of Insurance and Financial Services (DIFS) oversees the insurance industry in the state of Michigan. DIFS Director Anita Fox talked to Morning Edition Host Doug Tribou about what her staff is doing to respond to the situation.
Doug Tribou: What power does the Department of Insurance and Financial Services have to stave off the collapse that we're witnessing?
Anita Fox: Well, let me back up. When the law changed, Michigan had the highest auto insurance rates in the entire country. We're the only state in the nation with unlimited lifetime benefits available to auto accident survivors. So, the new law was intended to give people choices, and we were able to maintain this unlimited lifetime benefits. The law did not change the care to which previous or new accident victims are entitled. What changed is the amount of reimbursement that providers were entitled to.
DT: Along the lines of what you're saying about entitled to care, if you're entitled to it, you still need to be able to get it to actually make use of it. Dozens of businesses are going out of business because of the change. What are you seeing in terms of that when that Catch-22 exists?
AF: We've received in the neighborhood of about 80 complaints. We've been able to come up with a resolution for for about 60 of those, meaning that there is a care plan in place that meets the medically appropriate care for that patient. We've asked the insurers for a central point of contact that gets back to us in 48 hours to begin those discussions. As you mentioned, we're not the Legislature, we can't change the law, but I'm not going to sit on my hands here when people need care.
DT: Well, in talking about the 80 cases, or the 60 that you have resolved to this point, you mentioned putting them into medically appropriate care plans. But these people who are calling to complain presumably already had care plans, that many of the people we've been hearing from have been satisfied with. What are those changes and are they for the better for these patients?
AF: For the most part, as far as I'm aware, they are finding other caregivers. They're getting additional home services where it might be broken up, where one person was doing it and then they'll bring in different caregivers to cover some of those hours. There are a couple [of people] I've heard of going to adult foster care or group living situation.
I've read in some of your reporting about others that were displaced and went to hospital affiliates dealing with long term care, but my understanding was that those were short-term. Some people are happy or some people wish that they were at home 24/7 , and we're still working with them to see whether that can be worked out.
DT: Providers had been warning about this collapse for months before the change. Did your department make any attempts, to the extent that you're able to, to head off the situation, which now with all of these businesses closing so suddenly, feels like dropping off a cliff in a way?
Michigan's auto insurance law was enacted in 2019, but included some changes that took effect in July 2021.
AF: We're the department of insurance. We regulate insurance companies and we want to be a resource for these families. But I don't have, for example, what the capacity of certain provider industries are and what are the other alternatives. I can't really speak to how many there are, how many there should be based on market conditions. What I can tell you is the Legislature also, as you may be aware, set up this fund, $25 million, with the idea of getting some money out to providers who are saying that they're experiencing business interruption based upon what they're able to charge and what their expenses are.
So really, from our perspective, we certainly were aware of the changes coming. One of our big task was to educate the public. We did town halls that reached 10,000 participants to let them know these changes were coming and let them know that we're here to answer their questions.
DT: Michigan's old auto insurance law, as you mentioned, was the only one of its kind in the country, with mandatory lifetime unlimited personal injury protection, but people get horribly hurt in crashes all over the U.S. How do other states deal with the systems needed to care for the victims in those crashes? And what lessons might Michigan learn from some of the other states that have handled it?
AF: Well, if you talk to some of the folks here, they don't want to learn lessons from those other states. One of the things when people were lobbying against the law was that the care would be much more nursing home-centered and less adult foster care, home care, and those kinds of things. There are states that have $10,000 as the top of what you're required to have.
But things have changed [in Michigan] and if they've changed too much and if there are these issues, I can tell you that the governor has asked in writing and in person to sit down with the Legislature and address it. I know that the provider community has reached out to the Legislature, but in the meantime, I look at my job is to make sure that no matter what the Legislature does, that we're here a resource for Michigan consumers.
DT: The trauma in these accidents goes beyond the people who are hurt. It's also devastating for their family members and their support networks. And there may be some cases where people are happier with the care they're getting after these changes to the law. But I think it's fair to say that the care options are getting worse with these businesses closing. What advice would you have for crash survivors and their families trying to navigate all this as they are losing their coverage or feel like they're being shortchanged?
AF: Well, first thing I'd say, again, is talk to your providers about options. Talk to your insurance company, and express your concerns and see if you can work something out. Come to us, and we'll try and do whatever we can to help facilitate care that you need. And I suppose, reach out to the legislators if they feel that the law needs to be changed, and give their suggestions. And you're right, it doesn't just affect the person who's been injured, it's their whole family and those who love them.