A little more than a day after Gov. Gretchen Whitmer threatened to veto Senate legislation overhauling the state’s unique no-fault auto insurance law, Republican House leaders held a last-minute vote early Thursday morning on their own bill allowing drivers to purchase reduced coverage at a cheaper rate.
On Tuesday, state Rep. Jason Wentworth (R-Clare), who chairs the select committee on auto insurance reform, told reporters negotiations were ongoing and “everything is on the table at this point.”
House Republicans ended up bypassing their committee process, by which every bill is supposed to pass twice. They spent most of Wednesday crafting an 82-page substitute for House Bill 4397, which wasn’t ready until nightfall.
That meant there was no time for a nonpartisan House Fiscal Agency analysis of what the bill does and how it works — leaving reporters dependent on information from majority House Republicans.
The bill offers tiered options for insurance coverage and consumers with health insurance can opt out of personal injury protection (PIP) completely. Unlike the Senate bill, there is a five-year mandated rate rollback.
The mostly party-line vote after 2 a.m. Thursday was 61-49, with state Reps. Sarah Cambensy (D-Marquette), Karen Whitsett (D-Detroit) and Leslie Love (D-Detroit) crossing over.
“Now is the time for this chamber to make history,” state House Speaker Lee Chatfield (R-Levering) said before the vote.
This marks the most progress Lansing has seen on no-fault reform long sought by the insurance lobby after decades of debate — and eight years of failure during eight years of total GOP control of state government, including during last year’s Lame Duck session.
The House bill is different that Senate Bill 1, which passed the upper chamber on Tuesday in a mostly party-line vote.
That means that no legislation will hit Whitmer’s desk until there are more negotiations. Both chambers have to pass the same version of the same bill before the governor gets to decide whether to sign or veto it.
Republicans control both chambers and most Democrats — including the governor — were left out the negotiating process this week. Whitmer, who canceled public events in Southeast Michigan Tuesday, met with House Democrats in their caucus Wednesday night and urged a “no” vote.
On Thursday, Whitmer, Chatfield and Wentworth are scheduled to appear together at the Capitol as she signs bipartisan legislation reforming the state’s civil asset forfeiture process.
There’s been talk this year of enjoining an auto insurance overhaul to Whitmer’s plan to fix the roads via a 45-cent gas tax as part of her fiscal year 2020 budget proposal. However, there’s been no discernible progress. This week’s Republican action could be part of a negotiating gambit.
At the end of the month, Whitmer and legislative leaders will descend on Mackinac Island for the Detroit Regional Chamber’s annual policy conference. The business group has endorsed Whitmer’s tax hike and could be expected to put pressure there on Republicans, who have yet to unveil a counter-proposal.
But with the two votes passing auto insurance legislation this week, GOP leaders can point to progress on their top priority.
After a marathon session, the House stands adjourned until Tuesday.
Republicans cheer progress
Republicans say HB 4327, sponsored by state Rep. Jason Sheppard (R-Temperance), will reduce drivers’ auto insurance prices by allowing motorists to opt out of mandatory PIP or choose other options with less injury coverage.
House Republicans estimate that drivers could save between $180 and $1,200 a year, depending on the coverage they select. The bill has options with coverage up to $50,000 for personal injuries, going up from there to $250,000 and $500,000.
There also is an unlimited plan, which Republicans say would still save drivers about $120 a year.
Drivers who already have health insurance can forgo PIP coverage, which Republicans say will result in the high end of an average of $1,200 in annual savings. Like the Senate plan, private insurance, Medicare and Medicaid coverage would all qualify a driver to opt out of PIP coverage under the House measure.
“This is the best shot we got right now, and I’ll tell you what: If it isn’t working in a couple years, we’ll change it,” said state Rep. Joseph Bellino (R-Monroe).
Bellino said the issue is of particular concern to his constituents, who live close enough to the Ohio border and could live there instead. He said people have chosen to do so because of Michigan’s high auto insurance rates, and although he was “not totally” satisfied with the House bill, he likes “most of it.”
“The happiest thing I have about this whole thing … outside that door,” Bellino continued, pointing to the exit into the lobby outside of the House chamber. “They’re making probably $2 or $3 million dollars a year on this — the lobbyists. This is gonna turn the spigot off.”
Democrats decry ‘handout’ to insurance lobby
But freshman state Rep. Jim Haadsma (D-Battle Creek), an attorney, dismissed HB 4327 as a “rushed legislative handout to auto insurance companies.
“This bill doesn’t guarantee real premium reductions and passing this bill trades protection for a pot of porridge for promises that won’t be kept,” Haadsma said.
Democrats want insurance companies to stop charging drivers more money based on their ZIP code, credit score, education level or other non-driving factors. This is a particular concern for Detroit drivers, who pay among the highest insurance costs in the nation.
The House bill doesn’t go that far to outrightly ban insurers from using non-driving factors to set rates. HB 4327 does permit the Department of Insurance and Financial Services (DIFS) to create rules to do so if “there is no rational correlation between the factor and insurance losses.”
Whitmer said in a statement Tuesday that she would veto the Senate legislation because it allows insurance companies to continue to “unfairly discriminate in setting rates” and is not “reasonable, fair” or protective of consumers.
Democrats also were also incensed by the lack of public testimony on the legislation and the fact that they had only a few hours to look it over before Republicans forced a vote.
“It’s unfair. Until we get equity and redlining is addressed, all this is just fluff,” said state Rep. Cynthia Johnson (D-Detroit).
State Rep. Angela Witwer (D-Delta Twp.) said auto insurance reform is “not a partisan issue” but the process has been.
“This is a problem that deserves our time and attention, and jamming a bill through the House without proper care or debate is simply not the way we were elected to govern,” she said.
In a statement issued after the vote, House Democrats outlined their own plan with a 25-percent rate reduction for five years, with any future increases tied to inflation. There’s also catastrophic care coverage, negotiated rates between insurance companies and health care providers and a three-year look-back rule for claims.