Minnesota insurance agencies and members of the medical field are waging a battle over the stateâÄôs no-fault auto insurance system, and the fate of drivers is caught in the middle.
Minnesota is one of only nine states in the U.S. with no-fault automobile insurance, which only deals with accidents involving physical injury. The policy states that instead of taking an accident to court, driversâÄô automobile insurance will cover their medical bills, regardless of who was at fault.
Three state senators have proposed bills that would change the system âÄìâÄì two would reform no-fault insurance and the other would repeal it altogether.
Under the current system, a case can only be taken to court if a driverâÄôs medical costs are more than $4,000, if they experience 60 days of disability or if they are permanently injured or killed.
The policy was intended to decrease the number of automobile accidents taken to court, but many insurers claim the opposite is happening.
âÄúThe reason you see the ads for 1-800-ASK-GARY is because the medical payment part of that system is really broken,âÄù said Mark Kulda, a spokesman for the Insurance Federation of Minnesota.
âÄúNo-fault auto has no cost control whatsoever,âÄù he said. âÄúSo auto insurance pays full sticker price for medical bills, and thatâÄôs expensive, and it gets reflected in your premiums.âÄù
University of Minnesota psychiatry student Kyle Menary has totaled two cars. The first accident was nine days after he received his license. He estimated that his insurance is at least five times more expensive than when he started driving.
He walked away relatively scratch-free from both incidents, with only bumps, bruises and leg pain. If he had gone to a âÄúshadier chiropractorâÄù and claimed he had injuries based on the accident, Menary said he felt he wouldâÄôve had a decent shot at some insurance money.
But he added he would not have gone to court over his injuries.
âÄúI wouldnâÄôt want to defraud an insurance company,âÄù he said. âÄúI know it comes out of insurance holdersâÄô pockets.âÄù
Sen. Geoff Michel, R-Edina, presented his bill âÄìâÄì which would remove no-fault insurance entirely âÄìâÄì to the Committee of Commerce and Consumer Protection on Tuesday, where it was tabled.
Minnesota, which has the 28th-highest cost in automobile insurance premiums nationwide, has high rates of auto insurance fraud, Michel claimed.
âÄúIt calls into question, what are we getting from this no-fault system?âÄù
One in five Minnesota drivers doesnâÄôt have insurance, and efforts to increase the penalty for such drivers havenâÄôt lowered rates, he said. âÄúI think repealing the system makes sense. It would save Minnesota families and drivers hundreds of dollars a year without sacrificing care.âÄù
Opponents of the bill say patient care will significantly deteriorate if the state eliminates no-fault insurance. Members of the medical field said it will leave millions in unpaid bills each year to hospitals and emergency care centers, making it harder for them to provide services.
The cost of personal injuries to health care providers would be heavy if they didnâÄôt have auto insurance and couldnâÄôt pay out of pocket, said Dr. John Wolfe of the Minnesota Chiropractic Association.
âÄúWe canâÄôt carry seven figures of uncompensated, unreimbursed medical expenses annually,âÄù he said.
Ambulance drivers and emergency response workers agree.
âÄúOur reimbursement federally and locally has been declining significantly over the years,âÄù Aarron Reinhart, director of the Lakes Region Ambulance and the Minnesota Ambulance Association, said. âÄúThe fragility of ambulance services is at the point of crisis, and taking away this service would push us over the edge.âÄù
Two other senators proposed bills that would revamp the system, changing the thresholds and putting in cost controls meant to stop fraud and lower premiums for Minnesota drivers.
The Committee on Commerce and Consumer Protection voted in favor of these bills Tuesday evening and passed one on to the Judiciary and Public Safety Committee and another to the Committee on Finance.
âÄúI think overall I like no-fault,âÄù Sen. Paul Gazelka, R-Brainerd, the author of one of the reform bills, said.
His bill would change the structure of soft-tissue injury claims, which deal mainly with chiropractic care. It would restrict auto insurance coverage of such claims. It would also increase the maximum benefits for disability, income loss and funeral expenses.
Sen. Michael Jungbauer, R-East Bethel, voted in opposition of GazelkaâÄôs bill and said he was worried too much control would pose problems.
âÄúI think itâÄôs pretty close, but I am concerned about consumers getting the health care they need,âÄù he said.
Howard Fidler, a chiropractor, said he believes the current system is working fine, and any changes will have a negative impact.
âÄúOne, people that are hurt are not going to get care, and two, itâÄôs going to drive everything to litigation and the courts will be busy as can be,âÄù he said, adding that the biggest issue is for people who are injured and at fault âÄìâÄì who will have their health insurance go âÄúthrough the roof.âÄù
For small businessman Terry Foster, who testified at TuesdayâÄôs committee meeting, the decision to repeal or reform is a simple one.
âÄúYou have to make a decision if youâÄôre going to throw the bathwater out,âÄù he said, âÄúand also the baby.âÄù