Driving down auto insurance rates for Michigan motorists finally moved out of the starting gate Tuesday with Senate passage of a bill that would build more consumer choice into insurance policies. It’s not perfect, but it offers a framework for delivering meaningful reform.

The bill addresses the primary reason Michigan has the highest-in-the-nation auto insurance premiums: the unique guarantee in its no-fault law that provides unlimited coverage of expenses related to injuries suffered in an automobile accident.

Under the Senate reform, crafted by Sen. Aric Nesbitt, R-Lawson, motorists could choose between three tiers of personal injury protection: $250,000, $50,000 or no coverage at all.

Republican senators, all of whom voted in favor of the measure, say it will reduce premiums by 15% to 36%, depending on the level of protection selected. Motorists would also save $180 a year per policy through Michigan Catastrophic Claims Association fee reductions.

That’s a significant savings in premiums that average $2,600 annually in Michigan, and nearly double that in the city of Detroit.

But critics raise the valid point that moving the cost of catastrophic care away from auto insurance policies will simply shift much of it to the state Medicaid program, meaning taxpayers will foot the bill. Estimates are the change could raise Michigan’s Medicaid expenditures by $66 million over 10 years.

The health care industry, including health insurance companies, have largely objected to policies that don’t include personal injury protection, fearing they will be stuck with the costs for uncompensated care.

They’ve argued instead that auto insurance premiums should be addressed instead by cracking down on the practice of setting rates based on factors other than driving records, including ZIP codes and credit scores. Democrats mostly withheld their support for the bill because Republicans cut out provisions to eliminate those practices, and did not mandate insurers guarantee a premium reduction.

But the real issue with premiums in Michigan is the unlimited medical benefits, and costs are not likely to be substantially reduced without capping those payouts. Whatever form the bill ultimately takes must keep the focus on medical costs.

Other provisions of the bill offer promising reforms toward that goal. It would adopt a fee schedule for all auto-related medical treatment, would crack down on ambulance chasing by attorneys, and stiffen penalties for fraud.

The plan earned the endorsement of the Michigan Chamber of Commerce but other business groups are holding back, hoping that no-fault reform and the cost-cutting it would provide could be tie-barred to a fuel tax hike to fix the roads.

Considering only two Democrats, Sens. Adam Hollier and Sylvia Santana of Detroit, voted for the bill, its chances of getting the signature of Gov. Gretchen Whitmer should it pass the House is uncertain.

But at least it puts on the table an outline of reform that could be shaped into a bipartisan bill to deliver real relief to Michigan motorists.

Both the House and the Senate set no-fault reform as a top policy priority this year. Passage of the Senate bill moves them a step closer to that goal.

— Detroit News