DETROIT – It was one of the greatest tragedies in Michigan sports history. A limousine carrying several members of the Detroit Red Wings hockey team went off the road and smashed into a tree.
That was in June, 1997, days after the Red Wings had won their first Stanley Cup in decades. No one was killed, but star defenseman Vladimir Konstantinov suffered catastrophic brain injuries. Today, he still needs around-the-clock home care.
The only good thing about this story is that when it happened Michigan had the finest catastrophic car insurance in the world for severely injured victims of auto accidents. Insurers, and through them, the insured, were required to pay into a fund that completely covered their medical needs.
But insurance companies didn’t like that. They wanted to get their hands on a big chunk of the $18 billion or so in that fund. Powerful Detroit Mayor Mike Duggan wasn’t happy either, because car insurance rates in his city were so high they were driving people away and preventing them from moving in.
So in 2019, they made a deal. Gov. Gretchen Whitmer supported a plan the insurance companies loved under which everyone in Michigan got a reduction in rates … at least temporarily. Some lawmakers, especially her fellow Democrats, found this appalling. State Rep. Yousef Rabhi, then the minority floor leader, said “there was nothing redeemable about this proposal.” After a year or so, everybody who has car insurance eventually got a one-time rebate of $400. Rabhi, who is now out of government, told me “It should have gone to the survivors of catastrophic auto accidents.”
For everyone was no longer fully protected. Insurers got their wish. Benefits were severely cut, and so were the number of hours they had to pay for attendant care for those, like Vladdy Konstantinov, who can no longer function on their own.
This has caused enormous anxiety, anguish and hardship. A study last year by the non-profit Michigan Public Health Institute found that the new law had led to 7,000 severely injured victims being discharged from institutions, many or most because they no longer were covered and didn’t have the ability to pay.
Additionally, more than 4,000 health care jobs had been lost and 24 businesses closed, numbers almost certainly higher now. Patients did get a reprieve last year, when the Michigan Court of Appeals ruled that the law wasn’t retroactive, and that patients who had been receiving full care before 2019 have the right to keep getting it for life. That ruling has been appealed to the Michigan Supreme Court, which is thought likely to uphold that decision.
But even if it does, those victims who have been maimed since the law passed, as well as all the ones who will be terribly injured in the future, are out of luck — unless the law is changed again.
To be sure, there is some pressure to do just that. At Michigan’s annual Mackinac Island conference two weeks ago, Tom Judd, the head of the Michigan Brain Injury Provider Council, said in a statement that “The data is clear; auto insurance reform has failed crash survivors, their families and dedicated care providers.”
He called enacting a “reasonable, sustainable and fair solution” the first step “toward righting a moral injustice,” and said it should be a priority for the legislature and the governor.
To date, however, there are no current major legislative initiatives to do that, even though Democrats, who historically have been more sympathetic to the victims, now control all branches of state government.
More progressive Democrats like Rabhi are unhappy with the governor over this issue, and some grumble that her background has made her too friendly to the insurance lobby. Her father, Richard Whitmer, was CEO for many years of the nonprofit insurer, Blue Cross Blue Shield of Michigan.
But what about the official reason for ending full catastrophic care coverage in 2019 — lowering Michigan’s highest-in-the nation auto insurance? The acclaimed Poverty Solutions program at the University of Michigan did a study of that in late 2021.
The bottom line? The auto insurance reform law did cause rates to dip by a remarkable 18 percent in the program’s first year. But the bad news, the study found, was that it really didn’t make enough difference, especially in terms of eliminating differences by race and “geography,” meaning setting rates by where people live.
So while the average rate to insure a car in the Wolverine State was $2,535 in 2020, it was $5,146 in the city of Detroit — down by more than a thousand dollars, but far more than most Detroiters, who had a per capita income of $20,780, could realistically afford.
The Poverty Solutions analysis recommended reworking the law to do more to prevent setting rates by race, which in reality is still happening And it found that, indeed, the way that catastrophic claims had been handled has been essentially a disaster.
“The sharp reduction in reimbursement rates for certain services … has forced some medical providers out of business and jeopardized access to long-term care for some catastrophic accident victims.” It recommended restructuring the fund “to support long-term care facilities and cover higher reimbursement rates,” for medical providers.
“We need to acknowledge what’s working, and fix what’s not,” they concluded. It’s now up to Michigan’s lawmakers, in other words, to fix what they have broken.
(Editor’s Note: A version of this column also appeared in the Toledo Blade.)
