Over CRC’s 100 year history, it has made an outsized impact for such a small organization.  This is the seventh in a series of blog posts highlighting CRC’s top projects and reports since its inception in 1916.

In 2013, Citizens Research Council of Michigan waded into the often contentious topic of Michigan’s no-fault automobile insurance, a subject it had yet to explore in its 97 years.  Many groups have weighed in on the no-fault law, but Medical Costs of No-Fault Automobile Insurance was the first to look at the narrow topic of the medical costs associated with no-fault auto insurance in such depth. 

Since 1973, Michigan drivers have been required to purchase personal injury protection insurance, which pays for unlimited medical costs for victims injured in auto accidents, regardless of fault.  The intent of this insurance system was to reduce the number of disputes, fraudulent claims, and litigation associated with auto accidents compared to a tort-based insurance system.  While successful in meeting some important policy goals, no-fault insurance premiums and its associated medical costs have proven to have more direct costs than all other types of auto insurance systems. 

CRC’s research revealed that medical spending related to no-fault is higher than for other types of auto insurance and for medical spending related to non-automotive incidents because: 1) auto insurers pay higher prices for medical services than general health insurance providers; 2) auto accident victims in Michigan use more medical services following auto accidents than auto accident victims in other states; and 3) state statute requires that auto insurers reimburse the injured for medical expenses related to those accidents for lifetime medical expenses associated with the injury, with no dollar limit. 

Michigan’s unique and generous medical coverage for auto accident victims includes “all reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.”  While only 0.5 percent of auto accident related medical claims cost more than $400,000, those with costs that exceed this threshold are those with burns, brain injuries, quadriplegia, paraplegia, and other serious injuries, and victims face a lifetime of rehabilitation and home care needs.  Michigan’s current system ensures that these victims are cared for while the need exists.  An important finding of the report, that had yet to be communicated by other groups, was that there were certain reforms that would preserve these key and generous benefits of the current system, but decrease costs to auto insurers and allow premium prices to drop. 

Both legislators and citizens have made attempts to reform the medical component of no-fault.  A voter initiated proposal was on the statewide ballot in 1992 and a referendum on a law reducing medical expenses related to no-fault was on the ballot in 1994; both were defeated by over 60 percent of votes.  Reform proposals for no-fault are common at the state’s capitol, but few see much movement once they are introduced.

Response to this report was immense.  Within the week following publication, CRC’s report was cited by the Associated Press and another 20 newspaper outlets all over the state, and CRC was interviewed on numerous radio shows and on a local news station.  CRC was invited to present findings of the report to a joint special session for the state House and Senate Insurance Policy committees.  The report was downloaded over 32,000 times in the first two weeks, demonstrating both the public’s desire to learn about the topic and the reach of the report itself. 

Medical Costs of No-Fault Automobile Insurance won the Governmental Research Association’s 2014 award for Most Effective Education.


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