Gov. Gretchen Whitmer is threatening to veto House Republicans’ newest plan to allow auto insurance companies to sell reduced-coverage plans with a mandated rate decrease.
Republicans are heralding House Bill 4397, which passed after 2 a.m. Thursday, as a way to offer drivers relief from Michigan’s high auto insurance rates. The bill would allow insurance companies to sell plans that include a smaller amount of Personal Injury Protection (PIP) if the customer already has health insurance. Republicans say the no-fault insurance overhaul will mean rate reductions ranging from $120 to $1,200 a year.
But after vowing to veto a similar GOP plan, SB 1, that passed the state Senate on Tuesday, the governor suggested on Thursday that she would veto the new House measure, as well. She was not part of the negotiating process as the GOP-controlled House and Senate took action this week.
As the chambers have passed different bills, Republican leaders still have to hash out differences before any bill gets to her desk.
Whitmer said HB 4387 still does not protect consumers enough, failing to forbid insurance companies from charging drivers more based on their ZIP code, credit scores, gender, education level and other non-driving factors — longtime sticking points for Democrats.
“I’ve been very clear that I’m not going to sign a bill that preserves a corrupt system where insurance companies are allowed to unfairly discriminate in setting rates,” Whitmer said Thursday.
Whitmer made those comments at a press conference in which she signed a criminal justice reform package. Both state House Speaker Lee Chatfield (R-Levering) and state Rep. Jason Wentworth (R-Clare), who chairs the select committee on auto insurance reform, happened to be in attendance.
“I’m only interested in signing a bill that is reasonable and fair and actually provides strong consumer protections and immediate financial relief,” Whitmer said. “In their current form, neither bill lives up to any of that.”
House Republicans short-circuited the committee process to present an 82-page substitute for House Bill 4397 during a marathon House session, as the Michigan Advance reported. The bill wasn’t ready until nightfall, and no public testimony was held for it.
Whitmer said Republicans’ current bill “preserves a system that allows discrimination in rate setting” and criticized the fact that its mandated rollbacks are set to expire within five years, saying “there is no guarantee that rates will actually roll back forever.”
Whitmer called on lawmakers to “negotiate in good faith” on a bill “that actually protects consumers,” taking the opportunity to renew her call for consensus over “a budget that fixes the damn roads.”
A so-called “grand bargain” over new taxes for roads and an overhaul to auto insurance has been in the ether at the Capitol.
However, Chatfield stressed to reporters on Thursday that he doesn’t view that as an option, saying he won’t trade what he views as “good policy” — auto insurance reform — for “bad policy,” meaning Whitmer’s proposed gas tax increase.
Duggan weighs in
Detroit Mayor Mike Duggan has been a force on the auto insurance issue and tried to put together a deal last term while working with Republicans in the Legislature.
He’s come up with his own plan for Detroit residents who pay some of the nation’s highest premiums. In the 2018 Democratic primary, Duggan endorsed several candidates running for state House and Senate seats who supported his plan and had a mixed track record.
Both Chatfield and Lt. Gov. Garlin Gilchrist sat together at Duggan’s State of the City address in March and vowed to work together on overhauling auto insurance.
The mayor’s chief of staff, Alexis Wiley, on Thursday called the House bill “very encouraging,” but she said it does not go far enough.
“It should save the average Detroit driver $1,000 to $1,500 a year,” Wiley said in a statement. “The Mayor still would like to see the discriminatory effects of non-driving factors like credit scores eliminated and will be working with the Senate to try to get those issues addressed equitably.
“The Mayor deeply appreciates the hard work of legislators on both sides of the aisle over the last couple of weeks to finally solve this important issue.”
GOP victory lap
Whitmer’s opposition — and the several steps left to go in the legislative process — haven’t stopped Republicans from taking a victory lap, however.
Chatfield and Senate Majority Leader Mike Shirkey (R-Clarklake) both argued that the House plan offers real rate relief. Their fellow Republicans took to Twitter to tout their respective no-fault overhauls.
“I think it’s important that we deliver real relief with guaranteed rate reduction. That’s what our reform did last night,” Chatfield said after the Thursday press conference.
The Republican leader said negotiations over legislation will take place between all parties. Shirkey, meanwhile, said he will be spending the weekend comparing the House bill to its counterpart Senate Bill 1, with negotiations continuing into next week.
One interest group representing Michigan insurance companies supports the overhaul, but would rather not have mandatory rate rollbacks.
Insurance Alliance of Michigan Executive Director Tricia Kinley said in a statement that the House plan “addresses the major culprits driving up the cost of auto insurance in Michigan … we have serious concerns with the arbitrary rate and regulatory mandates that will be counterproductive to the goal of saving drivers money.”
Republican leaders released the bill language just hours before the vote, with no public testimony and without passing them through committee. The Senate GOP leader attempted to refute claims by Democrats that the process has lacked transparency.
“Motorists save a bucket of money under the House plan,” Shirkey said. “It’s been processed through committees for four months; we’ve been voting. So anybody that maintains that this has been, you know, anything other than a very deliberate process is choosing to find things that aren’t there.”
House and Senate Democrats disagree. Still, Senate Minority Leader Jim Ananich (D-Flint) still says he’s hopeful that lawmakers can agree on a final product.
“I think we can solve this,” Ananich said. “I’ll reach out to Sen. Shirkey over the weekend. If he’s made up his mind, that’s up to him.”
Health groups denounce plan
In addition to most Democratic legislators, groups representing health and hospital interests do not support the latest House plan, criticizing both the political process from which it emerged and the policy itself.
Thomas Constand, president and CEO of the Brain Injury Association of Michigan, hammered both plans for not protecting drivers from “predatory” insurance companies who charge higher rates for non-driving factors. He said it also fails to offer sufficient medical coverage for drivers impacted by traumatic accidents.
The association is a member of the Coalition Protecting Auto No-Fault (CPAN), which opposes efforts to cut mandatory lifetime personal injury coverage.
“It doesn’t protect consumers in that it doesn’t really address the unfair discrimination practices that are used by insurers,” Constand said of the House plan. And because the rate rollbacks are set to lapse within five years, “this is a for-profit industry … so you can fully anticipate that rates will go up.
“Legislators had two hours to review an 82-page bill,” he continued. “There was no public testimony. There’s a lot of smoke around that. Is this a mirage?”
CPAN President John Cornack praised Whitmer in a statement Thursday “for standing up for Michigan consumers and rejecting this unprecedented political maneuver.”
The Michigan Health and Hospital Association (MHHA) also came out in opposition to the plan.
Chris Mitchell, a longtime MHHA lobbyists, said the bill will have a “haphazard” impact on hospitals and health care providers and criticized the lack of public debate.
“You mean the body elected by the people did not want to hear from the people?” he said, expressing his anger that Republican leaders did not give lawmakers a chance to hear from “families who had been impacted by these accidents and [who] could talk specifically about how these changes would have affected their lives.”
Another group, the Michigan Brain Injury Provider Council, announced on Thursday it was launching the #TeamPromise campaign telling the stories of car crash survivors who benefited from medical treatments they received under the current no-fault insurance system.