Sometimes good ideas prove to be bad ideas and the mark of any good decision-maker is having the humility to admit the error and do something to put it right. For the purposes of this article we need to go back to 1973. This was a period when morality was still a driving force in politics. Perhaps surprisingly, legislators wanted to be seen doing the "right" thing even if it was less than popular. So this year saw Michigan become the only state in the union to introduce mandatory unlimited medical benefits for those injured in traffic accidents. This was the high-water mark for financial responsibility, taking the view there should always be enough money to treat those injured on our roads.

The only problem with idea is the cost. Many people are seriously injured and require long-term care. Worse, without a cap on the spending, there has been a temptation for hospitals to offer an open-ended and comprehensive treatment program for everyone injured. This helps explain why Michigan has one of the highest premium rates with Detroit being the most expensive city in the US (New Orleans is the second most expensive city where average premium rates are one-third lower). The claims for personal injuries have more than tripled in value over the last twenty years. Today, the average driver pays more than $25,000 per year for cover. Such high rates in a state with long-term structural unemployment has forced many drivers to risk running without insurance. The estimate is that 17% of the drivers on the road are uninsured.

State Senator Virgil Smith who represents Detroit is currently drafting a bill to use the city as a testbed for a new approach to insurance, following models in California and New Jersey. The plan is to allow insurers to offer a basic policy to all drivers who earn less than $30,000 per year, drive a vehicle worth less than $20,000, and have a clean driving record. Although the Senator is still to set limits, the proposal looks to set a cap on medical claims, probably around $50,000. The expectation is that those who would be eligible would see their annual insurance costs fall to as little as $1,000 per year. If this is proved effective in reducing the number of uninsured drivers, the program would be rolled out over the state. Again this follows the example of California which tested its Low Cost Automobile Insurance Program in Los Angeles and San Francisco before extending it to the whole state.

It may well be that, as medical costs have been rising fast, Virgil Smith's suggestion of a $50,000 limit is way too low. But the option of doing nothing is obviously irresponsible. There's a crisis caused by the lack of cheap auto insurance for those on low incomes. It's for the state to control costs. This is the only responsible thing to do when the state mandates its citizens to buy insurance. When most people acknowledge car insurance rates are unaffordable and this forces people to break the law, the law must change.