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Studies: Injured Drivers Treated Worse After Co's Switch To Tort System

November 9, 2005

In 2003, Colorado shifted its automobile insurance law from no-fault to no-sense. Since then, drivers have returned to a world of hassle and inconvenience, and Coloradans are now seeing a related increase in total health insurance premiums. In fact, some drivers are also receiving less care for injuries suffered in accidents. One study says the switch from no-fault is costing state hospitals $81 million a year.

In response, state Rep. Bernie Buescher, D-Grand Junction, plans to introduce a bill restoring a streamlined no-fault insurance system when the legislature returns in January. Buescher's proposal deserves to become the basis for a system that serves the needs of Colorado citizens - not the lawyers and witnesses-for-hire that benefit from the current tort-based system, where victims are only compensated for their injuries if they can win a lawsuit.

State Rep. Morgan Carroll recently dueled with insurance commissioner David Rivera over whether automobile insurance premiums have actually dropped since the no-fault law was scrapped, as they were supposed to do. If the question is limited to automobile insurance premiums only, the evidence is inconclusive - it's difficult to compare today's bare-bones policies with those issued under no-fault, which generally provided more coverage. But it is clear that any drop in automobile insurance premiums has been more than offset by increases in those for health insurance. Such a shift was virtually certain to accompany the change from no-fault to a system where rival insurers hire expensive lawyers and witnesses to cancel each other out in the courts before deciding which company pays for a claim.

A recent study by the Trauma Care Preservation Coalition reports that ambulance companies, hospitals and other first responders have been hurt by the shift away from no-fault, under which auto insurance simply paid for the care of their clients without depending upon courts to decide who was to blame for an accident. Data collected from 63 Colorado hospitals show that automobile insurance coverage of medical costs decreased by more than 40 percent from 2001 to 2004. Those costs were largely shifted to private health insurance, helping make health insurance even less affordable. The coalition says the switch to tort has cost Colorado's hospitals more than $81 million a year.

Twelve other states and the District of Columbia had no-fault when Colorado switched back to the tort system in 2003: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah. None have chosen to abandon the economical and effective no-fault approach, and critics are already calling for Colorado to return to its previous system.