Kremlinology: National on ACC

Written By: - Date published: 10:40 am, June 16th, 2008 - 41 comments
Categories: election funding, kremlinology, same old national, workers' rights - Tags:

In most countries, accident insurance is big business. Insurers and lawyers make billions off premiums, claims, and court cases but many people don’t actually get any cover if they are injured. The Third Labour Government set up ACC to ensure everyone would have cover if they were injured. It also freed up the court system for more important things. Studies show ACC provides top-notch cover and is cost-effective.

Of course, the insurance companies lost a great money spinner and have wanted it back ever since. So, they have donated heavily to National to get ACC privatised. National did that in its dying days in 1999 but Labour reversed privatisation in 2000 just in time, as one of the major workplace insurance providers, HIH, later collapsed owing $1 billion. Privatisation of ACC remained a policy into the 2005 election, when the insurance industry gave National $1 million. National and the insurance industry agreed to keep the policy secret. But this memo leaked.

So, what’s their policy now? The hints are privatisation is still on the cards. National is still in secret talks with big business about policy. In recent days, both Bill English and Pansy Wong have been quoted talking about wanting ‘competition’. Allowing private companies to compete with ACC would see the insurers siphon off the most profitable, low-risk businesses and workers and put the principle of universal cover in jeopardy. But, hey, at least the insurers will make big bucks.

There would be no waiting until the last minute this time, either. Having learnt their lesson from 1999, National would rush through privatisation at the start of their term this time in an effort to make it harder to reverse later.

41 comments on “Kremlinology: National on ACC ”

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  1. burt 1
    16 June 2008 at 11:52 am

    Of course, the insurance companies lost a great money spinner and have wanted it back ever since.

    Well they can piss off eh, the Govt’s got it back and it’s way to profitable to let it go again.

    Meanwhile low income workers subsidise rich pricks with too much time on their hands crashing their mountain bikes….

    Go Labour – random redistrubition rules.

  2. Felix 2
    16 June 2008 at 12:00 pm

    It’s like deja vu all over again…

  3. erikter 3
    16 June 2008 at 12:02 pm

    SP, you’re now spinning faster than a supernova.

    Why did you stop at ACC? Why don’t we nationalise all supermarkets and food stores and kill competition completely? Surely, with your impeccable logic, the state can get us food at cheaper prices, can’t it?

    Go on, nationalise telecommunications, transport, buses and taxi companies as well, in the vain hope New Zealand may rapidly become a third rate socialist nation.

  4. Felix 4
    16 June 2008 at 12:03 pm

    Meanwhile low income workers subsidise rich pricks with too much time on their hands crashing their mountain bikes .

    That has to be the strangest comment I’ve seen from you burt.

    Can you expand on it at all?

  5. Tane 5
    16 June 2008 at 12:09 pm

    Erikter that’s just stupid and driven by ideology.

    SP isn’t arguing that we should nationalise everything, he’s arguing that ACC makes sense to remain in its current form as it works well for people. Privatising it or opening it to competition will only degrade the quality of coverage and service that people currently receive.

    As a logical extension, yes, if you can demonstrate that public monopoly provision of other services works better than private enterprise then by all means, nationalise away. I imagine there are some services where this will be the case, and services where it will not.

    You, on the other hand, seem to be arguing that all services should be provided by the private sector, regardless of whether it actually works better for the public. How does that make any sense?

  6. Peter Nelson 6
    16 June 2008 at 12:30 pm

    Labour are the party that took orders from the Kremlin.
    I now pay over $1000 PA in ACC, real cheap insurance, not, thieving bastards.

    ACC should be zero and everyone should do their own insurance. Pay the policy you want, not what the govt will give you.

    [lprent: I read the first sentence and couldn’t even categorize you as a troll – they have better imaginations]

  7. erikter 7
    16 June 2008 at 12:36 pm

    Tane: “Privatising it or opening it to competition will only degrade the quality of coverage and service that people currently receive.”

    Where are the facts to substantiate this statement?

    Tane: “You, on the other hand, seem to be arguing that all services should be provided by the private sector, regardless of whether it actually works better for the public.”

    Yes, yes and yes. Show me a private company which keeps losing money year after year. There is none, because such a company would go under.

    A true free-market economy in action.

  8. Felix 8
    16 June 2008 at 12:43 pm

    erikter:

    Yes, yes and yes. Show me a private company which keeps losing money year after year. There is none, because such a company would go under.

    So by your own admission you place the profits of private insurance companies ahead of the security of the people of New Zealand.

    Nice to know where you stand, now I can go back to ignoring your neanderthal idealogical gruntings.

  9. Steve Pierson 9
    16 June 2008 at 12:44 pm

    erikter. look at the states, look at how many people don’t have health insurance, let alone income insurance. ACC provides both to every new zealander at a very low price.

  10. Tane 10
    16 June 2008 at 12:46 pm

    Labour are the party that took orders from the Kremlin.
    I now pay over $1000 PA in ACC, real cheap insurance, not, thieving bastards.

    Oh God, another whinging employer. What is it with these people? You give them a business environment praised by none other than the world bank as the second easiest place in the world to do business, and all they can do is complain about the few crumbs they have to pay back to society.

    Seriously, you people are parasites.

    erikter:

    The facts are in the PriceWaterHouseCoopers study.

    As for your other point, a private company in control of major public infrastructure is never allowed to fail because the consequences would be disastrous. Instead, the government bails them out. A true free-market economy in action eh?

  11. BeShakey 11
    16 June 2008 at 12:54 pm

    Felix – “Yes, yes and yes. Show me a private company which keeps losing money year after year. There is none, because such a company would go under.”

    And thats one of the arguments against private provision of everything – where the costs of failure are too high. Private provision of schools – where does that leave students in a school that goes under because it doesn’t make enough money (remembering that in many cases there won’t be a feasible alternative either). Private hospitals – where does that leave patients in hospitals that go under? Of course, this doesn’t mean there shouldn’t be any private hospitals or private schools etc etc, and doesn’t help with what the ratio of public/private should be, but it does give a good reason to reject a 100% private system.

  12. burt 12
    16 June 2008 at 12:59 pm

    Felix

    There are many fundamental problems with the way ACC is collected, aside from the fact it gets it’s sneaky fingers into so many areas of our life.

    For example, there is no account taken in the premiums for the level of risk people engage in outside the workplace. I could be unemployed (or rich and living off my investments) riding a mountain bike around all day and I get full cover for accidents that might occur doing that. People not riding mountain bikes, or skydiving, playing rugby etc are subsidising people who choose to do that.

    Secondly look at some of the ways ACC is collected. A friend of mine has a nice collection of vintage motorbikes ( yes he’s a rich prick ) and he wonders why he needs to pay ACC levies on every registration (all 9 of them) when he can only ride one motorbike at a time. He also pays ACC levies for his car registration and he can’t ride a motorbike and drive a car at the same time. Do you agree it makes more sense if he insures himself for driving a car and riding a motorcycle?

  13. Lew 13
    16 June 2008 at 1:02 pm

    The thing about private insurance, and health service, is that no private provider wants the type of person whose risk factor outweighs their ability to pay premiums. Since poverty is often a causative factor in poor health, and dangerous jobs (forestry, etc.) are often poorly-paid, these two often go hand in hand.

    In principle, privatised insurance and health means the people who need cover the most due to poor health or dangerous work are least able to pay for it, and consequently don’t tend to get covered. And look – in practice this is exactly the case in the USA.

    Perhaps Peter Nelson, erikter and burt think that’s fine, or believe such people don’t have a right to healthcare (by virtue of the fact they can’t afford the cover they need). Is that it, guys? Or something else?

    L

  14. roger nome 14
    16 June 2008 at 1:04 pm

    Market fundamentalists like erikter want 20% of the population to have no health care, no income security, no schooling. Yep, go sell that to the electorate, and see what response you get. Oh actually, no need, we already have the Act Party’s polling at 1% to show us what people think of this law of the jungle philosophy.

  15. burt 15
    16 June 2008 at 1:08 pm

    Lew

    The forestry job is a bad example, as it’s work related. Work cover is a shared responsibility between the employer and the employee.

    But I guess if I’ve got poor balance, bad eyesight and an inability to judge distance and speed then there is no reason why people shouldn’t subsidise the accidents I get mountain running…. afterall I can’t afford to cover myself so why shouldn’t somebody else pay it for me?

  16. Lew 16
    16 June 2008 at 1:12 pm

    burt: That’s an argument to change the premium structure of ACC, not to scrap it and replace it with a privatised system, (though in fairness you haven’t argued for privatisation on this thread, just implied your support for it).

    You still didn’t answer the rhetorical, though.

    L

  17. Rocket Boy 17
    16 June 2008 at 1:13 pm

    Burt, any form of revenue collection is going to have limitations. The rating system is not perfect, neither is taxation. Generally Government (local and national) revenue is collected on a ‘those that can afford it – pay it’ model and for better or worse that is how things work in New Zealand.

    I’m an employer and think the current ACC system works very well. We pay around $1500 a year for our 7 staff whereas we paid around $20,000 a year for our various other insurances (PI, Travel, Car, Business interruption etc etc).

    It is not really fair to equate these numbers but I certainly wouldn’t trust the insurance industry to provide a better, lower cost service as a replacement for ACC, they will cherry pick the easy money then once they have control of the market start ramping up the costs and we will all end up paying, employers and employees.

  18. Felix 18
    16 June 2008 at 1:18 pm

    burt, all insurance is a cross subsidy. That’s the very nature of it. And what you don’t like about ACC is exactly what I like about it – it covers everyone, all the time. That’s real security which makes NZ a better place to live, and which no private company could possibly come near to achieving.

    BeShakey, that was a quote from erikter.

  19. Janet 19
    16 June 2008 at 1:33 pm

    Thank you for raising such a vital issue. There are several issues here. ACC provides the cheapest, most efficient, comprehensive and no fault compensation in the world. People from other countries come to NZ to admire it and can’t understand why we would let it be opened up to ‘choice’ ie privatisation which is a real and immediate possibility with change of govt. Other countries like Australia have only 50% or less of their population covered, and levies for some industries are huge. What does an optional scheme mean for those who are injured without insurance or injure others without insurance? Have you ever tried to claim off someone who has damaged your car but hasn’t got insurance? And that’s just a car, not a person.

    And for those people complaining about the cost of their ACC levies what if someone in their family had an accident and needed life long disability support which could be millions of dollars – aren’t they happy to subsidise them? At least in the meantime until they have their own expensive accident and realise what a great and cheap scheme we have.

    If we had an optional scheme those who didn’t have cover or couldn’t sue someone for damage would have to join the queue to get health and disability support through the Ministry of Health – meaning even less for those needing support for illness-related disability.

    Meanwhile the big insurance companies have their eyes on the huge ACC fund built up to pay all this compensation. But don’t let them have it – it belongs to the citizens of NZ.

  20. Nedyah Hsan 20
    16 June 2008 at 1:49 pm

    Then of course, when you really need ACC, it refuses to come to the party.

    Lost my hearing in one ear thanks to a random attack on the street, ACC refused to pay anything as “it’s not proven that you’ve lost your hearing as it’s just your word on it”. I couldn’t be bothered arguing with them (too long, and ultimately the cost/benefit doesn’t stack up) so I just waited around for my little slice of government funding to come into my pocket to have an operation to restore my hearing.
    Then I open my latest IRD statement and find that my wages have paid a good $900 to ACC, who has some seriously incompetent fund managers.

  21. burt 21
    16 June 2008 at 1:54 pm

    Nedyah Hsan

    ACC has much more important things to spend it’s money on, like advertising – all good monopolies need to advertise, especially in election years…

    Jokes aside – more people with situations like you have need to come forward. ACC is an excellent example of ideology putting the cart before the horse. One size fits none.

    We also shouldn’t forget that ACC levies went up again this year, but I guess that’s OK because it’s only nasty private enterprise who crank up premiums.

  22. Lew 22
    16 June 2008 at 1:55 pm

    Nedyah Hsan: yes, it is still an insurance company; the `any excuse’ principle still applies in full.

    L

    (who has been burned by insurers too many times)

  23. BeShakey 23
    16 June 2008 at 2:05 pm

    Sorry Felix, it annoyed me so I got carried away responding rather than tracking down the original.

    Still no response to the problem of provider failure in the provision of essential services though.

  24. BeShakey 24
    16 June 2008 at 2:11 pm

    Nedyah Hsan – I’m sure there are some shocking stories about ACC. Personally my only shocking story is about a private provider – I had to wait round in pain while they requested a steady stream of different forms, requested them again, realised they had them already, lost them, denied all this, admitted it but requested the forms again. Eventually it was sorted (and they waived the excess), but bad customer service isn’t the exclusive domain of ACC. There is an argument that without competition poor customer service is more likely, but there are a variety of good business models to avoid this. In the end, the existence of poor customer service (in itself) isn’t a reason to scrap ACC.

  25. Steve Withers 25
    16 June 2008 at 2:35 pm

    Universal insurance through tax is the best and cheapest way to ensure outcomes.

    Private insurance is the best way to provide profits to private insurers and desirable outcomes to cherry-pickd segments of consumers.

    ALL the evidence says the way we do it now is the best, cheapest way for the whole country and that it delivers the best outcomes for the greatest number of people.

    If National is taking bribes (um…donations) to let multi-national insurers get into the act, we need to know about that.

    Who wants US-style workers’ compensation? No RATIONAL person.

    We have to assume worst-case as National isn’t saying what they will do.

  26. erikter 26
    16 June 2008 at 2:42 pm

    “If National is taking bribes (um donations) to let multi-national insurers get into the act, we need to know about that.:

    As a former employee of a multinational yourself, you should know better. You cannot make assertions like that without proof.

    Shame on you, Steve Withers.

  27. Matthew Pilott 27
    16 June 2008 at 2:59 pm

    Erikter, perhaps the good book (Oxford) can assist you with the term assertion; the definition therein bares no resemblance to your use.

    people like Burt want their own cover that they sign up for (or were you talking about your motorcyclist friend?). Do you also like the idea of the ritual struggle for a payout everytime you need to make a claim? If so, you’re a real masochist!

  28. burt 28
    16 June 2008 at 3:48 pm

    Matthew Pilott

    I would rather have private cover for myself and my family, however I’m not saying that the govt should not provide assistance for “some form of cover’ for people who cannot afford any real world form of insurance.

    Unlike the mentality that insists that one size fits all, some people have very low risk lifestyles and shouldn’t be paying the same as adrenalin junkies like myself. I don’t think it’s valid that we make all people fit one single system probably because I don’t have issues with private enterprise. I get a pretty free ride on ACC, sure I pay for a motorbike registration and I pay levies via my salary, but you would need to know me to understand just how often I collect, at the expense of others. Based on my lifestyle my own insurance premiums would probably end up a lot higher than the ACC levies I pay and I would be happy with that, some people would pay less and I’m sure they would also be happy with that. Couch potatoes wouldn’t be subsidising my regular injuries from the various ways I physically thrash my body.

    ACC may be a good system for the lowest common denominator, I don’t actually have an argument with that, however as I said above, nothing is stopping the govt from providing an ‘insurance subsidy’ to low income workers or providing a default level of cover for beneficiaries etc.

    If your resistance to private cover being an option is because private enterprise will profit then I think you are letting your ideology trample over common sense. If private insurance companies don’t provide cost effective cover for people who want that option then they will not stay in business unlike ACC which just cranks up it’s premiums and reduces or restricts it’s cover to balance it’s books as required. We have no control or say about how it operates and we cannot opt out. Classic monopoly situation. Always bad for consumers and always good for the monopoly owners.

  29. ghostwhowalks 29
    16 June 2008 at 3:56 pm

    Even if national restores ‘competition’ for ACC.
    Note its only competition for the premiums but payments will still only be the highely regulated ACC levels we have at present.
    No ‘choice’ for the poor injured worker

  30. Felix 30
    16 June 2008 at 4:09 pm

    Of course burt you could, if you think you’re getting too much out of the system, simply not claim as often. That would sort of fit with the principle that voluntarily donating to charities is a reasonable alternative to paying tax wouldn’t it?

    As for your faith in the market ensuring sensible outcomes you only need to look around the world to see how well the market serves ordinary citizens in the health sector. Why do you think it would serve ordinary people’s needs here so much better than it does in, say, the U.S?

  31. burt 31
    16 June 2008 at 4:23 pm

    Felix

    A karate instructor I use to regularly train with had his nose broken 14 times, mine has only been broken 4 times and I’ll tell you what – them facial reconstruction guys don’t come cheap. Between the two of us we have probably consumed more than we will ever pay on facial surgery alone. How about dislocated shoulders, broken wrists, spinal injuries, knee reconstructions, ankle sprains, broken fingers & toes and concussion requiring time of work from other high impact sports I get into as well.

    Perhaps we should keep monopoly one size fits all ACC, I’d pay a fortune for private cover !

  32. Nedyah Hsan 32
    16 June 2008 at 4:24 pm

    Burt, Lew, BS,

    No media outlet at that time was even remotely interested in another “oh ACC screwed another over” story. I bet they would now.

    As far as ACC as a service/insurance entity goes. There’s a lot of work that could be done to ensure fair weightings, but not a lot of reasons to sell it apart from “we need more money to fund tax cuts”.

    I’m far more in favour of making those of us, who can afford and do have private health insurance, eligible to receive some sort of rebate on the ACC levies – across all levies that ACC collects.

    ACC don’t have to look far to realise “you’ve got private insurance which covers you for this, not for that, so we’ll cover you for that” seeing as all insurance clients are kept in a database in Wellington.

    My own health insurance covers me for death, disability, loss of mobility and any modifications needed to make a house fit for a wheelchair and other various essentials. This costs me approx $678 a year. Far less than ACCs $800! A rebate could be based on what cover I have, how much I paid. In this example, I would see a rebate of being around 40% of ACC paid. $320 back in the pocket would go some way to lessening the impact as that’s just under half my actual insurance costs.

    At least this way, those who can’t afford it, still have some assistance for receiving help. Those who can afford don’t feel so burnt by the notion of “free loaders”

  33. Lew 33
    16 June 2008 at 4:47 pm

    burt/Nedyah Hsan: The trouble is that competition is a trojan horse for privatisation. Your rationales are good, and in principle I like two-tier public-private systems, but in insurance it doesn’t work, and here’s why:

    1. ACC becomes optional for those who have made alternative private arrangements.

    2. Wealthy, healthy people working in non-hazardous jobs with safe hobbies sign up with private providers at a token rate which reflects their extremely low risk profile. These people stand to gain most from private cover.

    3. Fit, wealthy people with dangerous hobbies or recreational habits (like you) sign up for premium insurance at a high premium which guarantees them top-class service. High risk, high cost, but they can afford it.

    4. ACC is left having to cater for poor people in generally worse health, who tend to work in dangerous jobs and may or may not have hazardous hobbies, ie: the most demanding, least-profitable, least able to pay customers.

    5. ACC haemorrhages money and struggles to provide services for its clients, driving marginal cases (people who can nearly afford private insurance) into the arms of private providers, which worsens ACC’s problems. THis becomes a cycle.

    6. Eventually ACC reaches breaking point, public confidence in the system is so low, and private insurance is so entrenched that the only politically viable option is to privatise it wholesale, with an attached `rescue package’ settlement of billions to make its customer base attractive to a buyer.

    I have no problem with insurers making profits. I have a problem with insurers being able to cherry-pick from NZ’s populace, which is what will happen under a `choice’ model. It’ll leave the people who most need insurance without any viable options.

    A lot of the complaints about ACC are along the lines of `I’m subsidising you’ or `you’re subsidising me’. Yes, that’s what’s happening. People in civilised society subsidise each other. In this case the system is Pareto efficient, which is a fancy way of saying `nobody loses, some people win’.

    In the real world, it doesn’t get much better than that.

    L

  34. Snelly Boy 34
    16 June 2008 at 5:11 pm

    Seems to be an awful lot of misconception here today.

    Those advocating for the ‘privatisation’ of ACC what are you actually seeking?

    Is it opening up the provision of solely work place ACC coverage and claim servicing to compettition from the privatye insurance market as occurred in the last Nat led govt?

    Or is some complete jettison of ACC in favour of free market utopia which it appears a number of posters are advocating?

    For those “free loaders” you can’t have your cake and eat it too. To ditch the universal coverage of ACC would have to come with the removal of the no fault principle underpinning ACC.

    If that happens watch out for your massive cost increases. Not only the cost to the employer of increased business insurance premiums but private motor and contents (personal liability) insurance as well.

    Knock me over in your car and brain damage me even more than now and stare down the barrel of a lawsuit in the order of $10m to $15m.

    Do you want a system like the UK where an employee has to sue a ngeligent employer to access any form of compensation?

    Saying that, having a system which is the envy of the rest of the world means the fundamentals of ACC will never be touched by either side of the political spectyrum.

    As a senior member of the insurance industry I can vouch that what both the indutsry and the nats are after is a repeat of 1999.

    Personally, I feel it’s a mistake for there really isn’t any sound reason to do so. The supposed rationale of private bieng able to provide claim services cheaper and more effciiently is founded on only one thing and that’s getting people back to work quicker one way or another.

    The motivation of achieveing greatest profit possible doesn’t sit easy with work place insurance as the rest of the world has proven.

  35. andy 35
    16 June 2008 at 5:14 pm

    Burt

    Tell your guy to work on his blocks, 14 times thats poor technique 🙂

    What about the elderly, the cover they would have to purchase would financially break them according to their risk.

    osu.

    Snelly boy,

    Very interesting.

    As a senior member of the insurance industry I can vouch that what both the indutsry and the nats are after is a repeat of 1999.

    Wow!

  36. r0b 36
    16 June 2008 at 5:24 pm

    Between the two of us we have probably consumed more than we will ever pay on facial surgery alone. How about dislocated shoulders, broken wrists, spinal injuries, knee reconstructions, ankle sprains, broken fingers & toes and concussion requiring time of work from other high impact sports I get into as well.

    Are we all mad cycling martial artists here? Burt, it’s probably too late, but take care of yourself. I picked up my share of injuries from a couple of decades of martial arts, and I’m paying for it now. These things often find a way to come back and bite you later.

  37. Felix 37
    16 June 2008 at 6:15 pm

    The motivation of achieveing greatest profit possible doesn’t sit easy with work place insurance as the rest of the world has proven.

    That’s the thing. None of these are new ideas, we only have to look around the world to see exactly how these various private models function over time.

    There’s simply no good reason to swap an imperfect system for an absolutely failed one.

    Oh and burt, please be careful 🙂

  38. the sprout 38
    16 June 2008 at 6:52 pm

    i had a bit of experience with the fall-out from National’s attempts to privatise ACC.
    Accountability? never from private insurers – they go to phenomenal lengths, and invest a lot in lawyers to eschew any coverage.

  39. r0b 39
    16 June 2008 at 6:56 pm

    Hey sprout – welcome back!

  40. the sprout 40
    16 June 2008 at 7:33 pm

    cheers r0b, nice to be back.

  41. Hardy 41
    21 July 2008 at 5:19 pm

    We have been appalled by a private workplace insurance provider’s
    treatment towards one of our family.
    After an unsuccessful shoulder op the P.W.I.P. totally denied having any further responsibility to to continue any care of the person hurt in a workplace accident
    Now two and a half years later, six Doctors, of which four say further surgery is required for the original injury the two others could actually be deemed to have a conflict of interest in the matter, are still refusing to acknowledge what some top Specialists have determined needs to occur ,so the battle continues.
    There have also been three Solicitors involved( sadly two being useless) numerous reviews,court appears and $20,000 in legal fees which has us lead to the realisation ,if this families experience is anything to go by, A.C.C. contracting out to private workplace providers will become an even bigger nightmare for workers if National adopts this as policy should they take over the reins

    ANYONE ELSE OUT THERE WHO’S FOUND OUT THE HARD WAY??
    WONDERING ALSO HAS ANYONE SUCCESSFULLY SUED A.C.C. FOR SOMETHING SIMILIAR??