Medical Costs Are Raising Michigan’s Auto Insurance Premiums


When it comes to medical advancement, there is no doubt that America has the best health care services in the world. The high cost of medical services could justify such but many thought that they are getting for less.

The defects in the U.S. health care system will have a direct impact to the auto insurance industry. It has been noted that the medical treatment in this country rises up to 40% each year. And since portion of your auto insurance policy covers injuries during the accident, insurance providers would need to pass the said increase to their policyholders for the business to remain profitable – this situation happened to Michigan this year.

All states in the U.S. have some sort of “no fault” insurance law, but in Michigan, they are carrying it in a different way. Apparently, the reason for the increase of auto insurance rates in Michigan was not orchestrated by the insurance companies but by Michigan’s auto insurance system itself.

“Re-insurance” is offered by a non-profit organization known as Michigan Catastrophic Claims Association or (MCCA).  This organization works by reimbursing the insurance company if they receive a catastrophic Personal Injury Protection claim that is exceeding to the amount in the declaration sheet.  The MCAA can recompense the insurer of up to $460,000. All insurance organization operating in Michigan are also required to become a member of this group.

It is estimated that this membership is costing the insurance companies $125 per vehicle each year. On July 1st an increase of about $18 per vehicle was imposed bringing it to $143.00.  This will not be absorbed by insurance companies but will be passed on to their clients.

A deeper problem lies ahead

For most people, $18 a year is no longer a big thing for most of us. However, there are similar increases, which are seen to take place after the medical and health insurance sectors have acknowledge that providing for such treatments demand high cost and the need to profit.

The problem lies because of the problems being experienced by the U.S. health care systems and like tag of war, even a minor increase could affect all the major types of insurance be it a home or business coverage.  If we are to compare the services to EU countries such as France and Switzerland, these countries allow private individuals to operate and profit from boutique services like private hospital rooms, cosmetic surgeries, gourmet meals for patients to name a few.

However, their law specifically prohibits profiting on the basic medical services that every citizen from that country could benefit.

In the United States, the scenario is quite different. Insurance companies are free to profit from all forms of medical assistance and care they can offer. Many people thought that this particular setup is strangling them to their deaths – at least, economically.

There were few attempts made by the government to solve the current crisis but proved to be futile. The said federal health care system “reforms” only made the lives of the Americans miserable by transferring the burden to the public. Like me, if you are carrying personal injury coverage, you can expect nothing but the ever-rising rates for the profit-based U.S. health care systems.