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In praise of ACC

Written By: - Date published: 2:21 pm, April 3rd, 2008 - 34 comments
Categories: health, workers' rights - Tags: ,

accident-insurance.jpgIt was nice to see this independent report into the ACC scheme by Price Waterhouse Coopers. Amongst the general positive comments was this observation:

“The ACC under its current implementation structure performs as well or better than most other schemes we can observe around the world.”

“No fault” models (such as ours) are associated with:

• More injured people (70-95%) receiving compensation;
• More money reaching people: A higher portion of total costs (up to 90% in some schemes) goes directly to claimants’ benefits compared to perhaps only 50% in liability systems;
• Getting results faster: No fault systems get payment happening more quickly than in tort systems. The average settlement completion in the US tort system is 15 to 20 months, whereas benefits flow in 3 weeks on average in an uncontested workers’ compensation claim, and 4 months in contested claims; and
• Outcomes for people are better. A New South Wales study (on a blended system) found those on the no-fault system better off in terms of health outcomes and return to work rates.

So why privatise something that seems to be working so well?

John Key: “I want to confirm today that National’s policy is to re-establish a competitive market to provide accident insurance. This delivered more efficient accident coverage in the 1990s, and will do so again when National forms the government.’

Can we expect a change in direction?

34 comments on “In praise of ACC ”

  1. Draco TB 1

    John Key – proving National is out of touch with reality. They probably still think the US health system actually works and is cost effective.

  2. dave 2

    why privatise something that seems to be working so well? Ask any former manager who is assessed to be a stock clerk and is kicked off ACC onto a sickness benefit because he is too injured to work, despite the fact that there arent many stock clerk jobs going.

  3. Tane 3

    I doubt it. Remember last election National deliberately hid elements of its ACC policy from the public in collusion with the Insurance Council, then went on to receive $2 million in secret donations.

    No necessary connection there, but enough to make you wonder whose interests they’re working in.

  4. Steve Pierson 4

    “Ask any former manager who is assessed to be a stock clerk and is kicked off ACC onto a sickness benefit because he is too injured to work, despite the fact that there arent many stock clerk jobs going”

    – I will next time I encounter one, cause you know, you run into people in that situation all the time. And we must always be willing to throw out the baby with the bathwater

  5. r0b 5

    My favourite part? – “and will do so again when National forms the government”.

    Don’t get ahead of yourself there Johnny. There’s this wee formality called an election before anyone gets to form a government.

    (captcha: “sort elections” heh!)

  6. Pablo 6

    “Don’t get ahead of yourself there Johnny.”

    He wasn’t necessarily referring to forming a government this year. National will, probably, form a government at some stage in the next 20 years.

  7. insider 7

    I know little about ACC but it appears to be an organisation that delivers outcomes and those outcomes are determined by legislation. ie you are entitled to 90% of wage whether it is ACC or another company providing it

    So what is wrong with having a monopoly provider challenged by private ones if that brings down costs for the whole system and does not affect outcomes?

  8. dave 8

    Insider, you certainy know little about ACC if you dont know that it is 80% not 90% of the wage. It does deliver outcomes, but many of these outcomes are not determined by legislation, they are determined by polices which have nothingto do with legislation. If it brings down costs and does not affect outcomes you then haveto ask whether those outcomes are consistant with legisalation – ie is it a no fault scheme, effectivey, are all people being rehabilitated to their pre accident condition, are all getting all the home help they are entitled to, do all claimants have a say in their rehabilitation plans.

    The answer is no in all cases.

    So the process of getting these outcomes is not in line with legislation and I challenge anyone to prove me otherwise.

  9. insider 9

    Dave

    you seem to be saying it is not working very well now. Isn’t that all the more reason to look at options?

  10. Dan 10

    Go into any insurance office in the country and they are eagerly awaiting the carve up of ACC to private buyers if National gets in. They are not chasing efficiency or a better service for the public, but the chance to make big dollars.
    Insurance companies win; New Zealanders lose.

  11. Matthew Pilott 11

    Dan – agreed. When you look at it, the equation is very simple. ‘Will the money saved by increased efficiency due to open-market competition outweigh the profits extracted from the market by the competition.’

    Answer’s no.

  12. higherstandard 12

    MP

    No the answer is unknown until the question is answered via a competitive tender or request for proposals from private insurerers. The results of which could then be weighed against the incumbent ACC setup.

  13. Stephen 13

    Dan how does a competitive market automatically lead to big dollars for all the insurance companies??

  14. Steve Pierson 14

    higherstandard. We don’t have to repeat other countries’ mistakes to learn not to follow them.

  15. higherstandard 15

    SP

    If private providers can supply the same service under the same legislation and rules which govern ACC and save the taxpayer money why wouldn’t we consider it ?

  16. Steve Pierson 16

    If those things were the case that would be fine. But foreign experience shows that it is not the case. Why go through a legislative process for something that all the evidence shows would be a failure, providing worse cover than the excellent cover we have now?

    Maybe you should check out the post again.

  17. higherstandard 17

    SP

    I should probbaly clarify ….

    Any privatisation or part provatisation of an ACC scheme would have to be heavily regulated to ensure insurers met their obligations but to dismiss it out of hand is I beleive short sighted.

  18. higherstandard 18

    Apologies for the spelling typing with one hand and coffee in the other.

  19. Steve Pierson 19

    Yeah but I don’t think we are dismissing it out of hand, I think we’re dismissing it on the basis of evidence.

    Incidentally, do you like the sheet music photo? Took ages to set up right but now everytime I see ‘fade out with image of me looking messianic’ I think it was worth while.

    Hey, my captcha has a spelling mistake: ‘diner univeristy’ has Sam Dixon been mucking around with it?

  20. insider 20

    Was it worse or better when it was done in the 90s? Surely that is the best evidence we have? I’d point out that a lot of people think ACC underperforms as it is.

    Oh and to stroke your egos re the sheet music, I’d say you and KBB are far better at biting satire on JK and the nats, than your opposing blogs on Labour. Wonder if there is a media studies thesis in that? But then you have to score a hit occasionally given the sheer volume you post on one person!

  21. Matthew Pilott 21

    Just out of interest, and this is because of my lack of knowledge with the specifics of the area, but ACC isn’t meant to make any profit, right? The dues they take are purely to cover payouts and administration?

    I can’t see private companies being too keen to take that on…

    Also on the topic of ACC vs private insurace, I gather that satisfaction with private insurance as an industry isn’t exactly high, given their tendencies to not pay out wherever possible, and having fantastically complex policies that rule out as many pay outs as possible. This is not a model I would like inflicted upon New Zealanders.

  22. Dan 22

    Keen they are, so they must see profits somehow and somewhere. I am no insurance whizz but do know that the words out that if National gets in, then ACC is gone. But why?
    Stephen, you have wonderful faith in the competitive market which I do not share. Usually there are price-fixing deals, niches, cartel arrangements, nod nod, wink wink schemes. Have a look at airline arrangements or oil companies, theoretically in competition, but more often than not with various levels of understanding. the big price discounts in flying tend not to last or are designed to drive out competition.
    And now I hear the Nats want to sell Kiwibank. Can someone reassure me that is not the case.

  23. motorist 23

    Lets keep in perspective that ACC needed to build an investment portfolio to bring in investment return income to help fund the long term liabilties (long term injury costs). That current investment portfolio is somewhere around 9-11 billion dollars. Those funds were built up from us levy payers paying into the scheme.

    Also keep in mind that the Galvin Committee set out a plan to privatise the ACC long ago, with that came a niggardly mean case management designed to constrain access to medical treatment and other entitlements with the big push to “exit of the tail”(claims over 1 year old)where ACC used the “wcap” process to kick many injured people off onto winz benefits. imho, by severely limiting help to injured people, money was able to be funnelled into the investment scheme.

    So what happens to our public funded investment scheme for injured workers when national sets out to privatise all major accounts? The large invetment funds would look nice on any privaqte insurer balance sheet, but will that happen? will the private insurers obtain massive amounts of the acc investments to be transferre to private insurers?

    Furthermore, the largest account is the motor vehicle accident account. If that account is fully privatised then is nz on the way to compulsory vehicle insurance for accidents?

  24. Pat 24

    ACC is one of the largest expenses in my business, and it annoys the crap out of me because the premiums I pay are completely out of step with the actual risk profile of my industry. 7 years of excessive premiums and no claims. I would prefer to have the option of taking my risk profile to the market, and pay a market rate.

    [it’s not about you. It’s about insuring your workers have secure, dependable, transportable injury cover wherever they go. And you’re dreaming if you think it’s chepaer in a privatised system. SP]

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