Written By: - Date published: 12:18 pm, July 2nd, 2008 - 83 comments
Categories: national, privatisation, workers' rights -
Tags: ACC, merryl lynch, PriceWaterhouseCoopers
It’s refreshing to see some proper investigative journalism in this morning’s Dominion Post, with a revelation from Vernon Small that while National continues to try and downplay ACC and talk about “no privatisation in the first term,” a report from John Key’s old firm Merrill Lynch suggests National’s privatisation plans are an open secret among Aussie insurance companies, who are lining up for windfall profits.
“Publicly, as best we can identify, and contrary to the statements made by several insurers we have met with in New Zealand, the National Party has made no formal statement on its plans for the ACC,” the report by analyst Andrew Kearnan says.
“Informally, however, we understand the National Party has been very clear in saying it will privatise the ACC.”
It is expected such a privatisation programme would involve the handing over of the workers’ compensation and motor casualty accounts to private insurers, worth $2.1 billion in new ‘premium’ income to the Aussie insurance companies.
The cost of this will of course fall to ordinary Kiwis, who will be forced to pay higher premiums for reduced coverage, as both Merrill Lynch and PriceWaterhouseCoopers point out. Clearly this is not a party with New Zealanders’ best interests at heart.
It doesn’t take a rocket scientist to figure out National’s telling the public one thing and its backers in the insurance industry another on this one. You’ll recall this is exactly what happened last election when National met secretly with the private insurance lobby to collude on ACC policy, which was then deliberately withheld from the public to avoid political fallout.
Ultimately it worked for National last election – even when the damning memo leaked it was lost in the bustle and confusion of the election campaign and voters went to the polls none the wiser. National’s hoping to get away with the same trick this time; it’s up to the media to make sure that doesn’t happen.
UPDATE: Selected pages from the Merryl Lynch report [JPEG, 300k] are available by clicking the thumbnails below:
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Draco TB
You gotta laugh, you defend hospital waiting and by implication people being dumped off them, sent endlessly back and forward to their GP for assessments, while at the same time you justify ACC by saying;
“Bringing people back up to full health as fast as possible benefits the whole community in improved productivity.”
An intellect rivaled only by garden tools.
Lew 10.32pm, [sorry - reading backwards] point taken about cross subsidisation. Bottom line for me is that employees are fully covered for workplace injuries – and that employers take all reasonable steps to minimise those injuries.
Perhaps if private insurers looked at workplace insurance then the premium would shift to something more sensible like per FTE. You raise an interesting point there: the present levy system effectively puts downward pressure on wages in high-risk jobs[??]. Now that’s bad.
I guess I’d tilt things further in favour of cost following risk.
There are other areas where compulsory insurance and private companies have not resulted in actuarial Armageddon. Perhaps a teenager in the UK wanting to buy a WRX Evo XX turbo 4WD penis enlarger might think otherwise.
burt: “As long as Chess players don’t mind subsidising the lifestyles of people like this, then one size fits all is fine.”
I thought we’d already settled the social good part of individual universal cover?
jbc: “Bottom line for me is that employees are fully covered for workplace injuries – and that employers take all reasonable steps to minimise those injuries.”
Those are my bottom lines too. I see you’re arguing a system which rewards employers who work aggressively to make their workplaces safe. That’s reasonable.
“the present levy system effectively puts downward pressure on wages in high-risk jobs[??]. Now that’s bad.”
I agree, but the idea of tying levies to claim cost without changing the unit of risk is even worse for these high-risk industries. It might be worth considering if the unit of risk is change to per-hour or something like that, but this would bring major compliance issues, and would lead to employers under-reporting hours (as we under-reporting of wages already happens in many high-risk industries).
But it doesn’t follow that introducing private competition would necessarily improve any of this; what we’re talking about is internal reform.
L
Another crappy analysis from the ideologically-stuck Pierson. One must give him a bonus point for his consistent hatred of John Key. You can almost hear Pierson spit with disgust as he types. While I am increasingly of the mind that posts on the Standard are not worth negating for their sheer level of inaccuracy and feebleness, I can’t help but correct, yet another, poorly constructed argument purely on the basis that Pierson’s ego needs deflating.
The report by ML does not say that National will privatise. Rather they think they will, and think they ought to. It is not the same thing. ML wants National to “privatise” because it is in their best interests for National to do so; this does not mean that National is hiding its ACC policy. Pierson is convinced that because Key hasn’t personally provided him with a pre-released copy of Nationals policy (on anything), therefore National must have none. It’s a simple world according to Pierson.
If Pierson had bothered to take any neutrality in his political scrutiny, he would have realised that National has consistently promoted “opening up competition in ACC”, since well before 1999. In fact it has appeared in every election manifesto, and is not really a surprise to anyone that it might be in the 2008 one.
Furthermore, National has never used the word “privatisation”. There is a monumental difference between Key’s stance of “introducing private competition” and “privatising” ACC. If you can’t tell the difference, please, for the love of God, don’t say anything.
But you see, Pierson is totally opposed to competition of any kind and would rather that ACC costs billions of dollars to the tax-payer (of which he is not one), without giving NZers a choice. Choice is bad; choice is overrated. He cannot bring himself to respect people’s choices that differ from his own. Pierson despises choice because it leads people away from his perpetually saint-like Government ultimately he hates choice because people would not choose Labour.
The only good thing about this post – is that Pierson didn’t mention Cosby-Textor once. Congrats!
Take a page from Kiwiblogblog’s book, and bite the dust, Pierson.
Lew
I agreed that we were not going to agree on monopoly vs competition, I’m exploring the inequities of the ‘no fault’ component.
One of the risks I accept every time I jump on my mountain bike and head for the hills is that if I stack the bike badly enough I’ll have a repair bill. If I take a winger and land on my head leaving my helmet a bit munted I’ll need to replace it. Bang – $200 !
If I munt one of my wheels by stacking into a rock/tree then Bang – $300 !
Would you think it’s unreasonable if I had perhaps a $50 part charge at A&E because I had voluntarily engaged in a high risk activity. Or perhaps a $200 year loading on my own private insurance compared to the a person whom plays chess for their hobby and has a risk profile that is vastly different to mine.
Hey I’m putting my hand up here saying my risks are my responsibility, how can we say that is wrong? I understand that some people want to spend thousands on their mountain bike and say they can’t afford a loading on their insurance costs but IMHO they are being selfish and unreasonable. It would be like them saying that insuring their $140,000 car should be the same cost as insuring a low wage persons $3,000 car The person who would suffering here is the one who has the $3,000 car, do we really want that situation happening under the banner of protecting the people who can least afford insurance?
Hoolian – way to blow in at the end and make an argument that’s already been shown up.
Burt – honest, non-attacking question. Do you think such differentiation can be built into the system without adding costs (bureaucracy…) so as to simply increase the overall price to a point where low risk people pay the same, and high risk people have to pay more?
burt: I wouldn’t be averse to such a system, provided that nobody is ever denied care or cover based on their inability to pay. This would, in a pure sense, make something of a mockery of the system and would punish two classes of people: 1. those who are honest enough to declare all their dangerous hobbies (in the case of annual loading); 2. those who can afford to pay (in the case of co-pay).
Still, the system could still work as a disincentive to do stupid things, but only for those who can pay. Since that will be most people, I think it’s worth considering. However, as Matt says, this would make the system complex and prone to being rorted.
Additionally, it’s a slippery slope since the co-pay, loading or whatever would have to be very tightly constrained in order to ensure that most people could still pay, and that nobody was denied care.
L
Lew/Matthew
I’m not even going to try and design a system that could cover all of the concerns. However that isn’t to say that it’s impossible or even very difficult, just it will take hours to discuss in this forum and probably not get far past the “but…, how come…” stage.
I just look at it and say that the risk of a broken arm is extremely low in Chess (sure a fight could break out, punches could be thrown etc.. but it’s not likely) but the risk of busting an arm are pretty real on the mountain bike.
I totally agree that ensuring low/no wage people should never be turned away from A&E with an injury because they can’t afford insurance is something we should never let happen in NZ. Perhaps they get a bill form A&E and claim it back from MSD if they earn below a threshold . I don’t know the answers to this.
But how do you claim you “can’t” afford insurance when an “accident” happened while going hard out on a $2,000 mountain bike wearing about hundreds of $$$ worth of mountain bike kit?
My underlying take on it is that we should all be responsible for ourselves as much as we can. Accidents do happen, but busting myself on the mountain bike isn’t an accident – it’s a consequence of my decisions to ride in the hills. Tripping over the cat and splitting my face open on the doorway is an accident, but it wouldn’t be an accident if I had been drinking like a fish, it would be a consequence of my decision to hit the bottle Do you see where I’m coming from?
burt: That you’ve affirmed the principle of universal care means we’re at least capable of having a reasoned discussion about it. The problem of implementation will always be bigger than the problem in principle with these things – this is why we employ all those bureaucrats between Molesworth and Featherston.
L
Lew
I’m not affirming universal care, I affirming our social responsibility to help people who cannot help themselves. I’ll make this F-ing obvious for you.
If a beneficiary (especially a long term one) turned up in A&E with a neck injury from stacking their jet ski into a wharf then two things should happen;
a) The get a bill if they can afford a jet ski they can accept the risk of using it.
b) Set the welfare auditors onto them asap.
I also find it intriguing that when the solution to this is less bureaucrats via private options (choice) you hide behind the “more bureaucrats” facade. Very sad.
burt: Easy, easy – I’ve not been on the offensive, no need to take the defensive.
I think you have affirmed the principle of universal care in that people get treatment in the first instance, regardless of the ability to pay. In some privatised systems (notably the US) this isn’t the case by any means. On the question of eventual payment, I still tend to believe care should be free or very close to free for everyone, but I can concede your points about the ability to pay and the acceptance of risk.
And, I didn’t mean to imply `more bureaucrats’ at all – my point is that that’s why we have policy people – because they can solve implementation problems, it’s their job.
L
Lew
There are two separate issues, people who cannot pay and people who simply don’t want, or need, to take responsibility for their own actions so they don’t. Sorry I thought you were saying they are one in the same because everybody gets care one way or another.
I guess what I’m saying here is that something like a “community services card’ should not be in the same wallet as a platinum card
burt: “I guess what I’m saying here is that something like a “community services card’ should not be in the same wallet as a platinum card”
I quite agree.
L