Nats’ ACC plan only good for insurance companies and lawyers

Written By: - Date published: 5:22 pm, July 16th, 2008 - 51 comments
Categories: national, workers' rights - Tags:

National has confirmed it intends to privatise the ACC scheme starting with opening the work account to private competition. This would see private insurers cream off large and low-risk employers with special deals, leaving the taxpayer to shoulder the burden of the rest (which would, in turn, be the basis for privatising of the remainder).

National says privatisation will somehow bring workplace accident rates down, which it claims are rising. Wrong: workplace accident rates are falling. It claims premiums will fall. Wrong: our premiums are already among the cheapest in the world, and we don’t have to pay anyone’s profits.

Australian insurance companies expect to make $200 million off this privatisation. These profits will be made not by higher premiums but by reduced pay-outs. As you know, that’s how private insurers make profits – by avoiding paying out whenever possible. In practice, that will mean Kiwis missing out on speedy treatment and income coverage, while Aussie insurers get rich.

Part of the genius of ACC is in decoupling blame from compensation. Occupational Safety and Health investigates accidents and holds businesses to health and safety regulations, ACC ensures the injured get treatment and income compensation, and businesses are incentivised to be safe because higher accident rates mean higher levies. Because of this administration of injury compensation leads the world in cheapness and efficiency and there are few court cases. Introducing competing profit-making insurers who are trying to minimise payouts would mean more expensive administration and law suits between individuals, businesses, and insurers tying up the already stretched court system. This was the case before ACC, it’s the case overseas, and it was beginning to happen again when National introduced competition in 1998. The efficiency of ACC is the envy of personal injury law experts around the world* but introducing private insurers will put an end to that.

Only two groups stand to gain from National privatising ACC. Not businesses and workers – insurers and lawyers.

[*I was in a personal injury lecture in Finland, our American professor was introducing the perplexed European students to the common law personal injury litigation system. He concluded that only one common law country had managed find a way to get rid of this resource consuming, lawyer-enriching system. No prizes for guessing which one.]

51 comments on “Nats’ ACC plan only good for insurance companies and lawyers ”

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  1. infused 1
    16 July 2008 at 5:39 pm

    Using speedy in the same sentence as ACC is laughable.

  2. Oliver 2
    16 July 2008 at 5:49 pm

    You do realise that privitise and open to competition are two diferent things. Example, Telecom has been privitised and NZ Post has been opened to competition.

    Just because workplace accident rates are comming down it doesn’t mean that they can’t come down further or faster.

    If private insurers offer incentives to make workplaces safer then they will become safer, though almost every workplace accident I’ve witnessed has come from stupidity or laziness rather than fundamental safety issues.

    As for ACC efficiency, pull the other one, I’ve dealt with more of their absurdly inefficient clusterfucks than I care to mention.

    [it seems Oliver knows better than PriceWaterhouseCoopers who carried out a study of ACC and concluded it was very efficient compared to cover in other countries. Next, Oliver denies the IPCC’s findings on climate change because sometimes he’s cold. SP]

  3. Lew 3
    16 July 2008 at 5:53 pm

    Now’s a good time to reiterate my challenge to anyone who thinks this isn’t the first step in a privatisation plan, which would ultimately result in the scheme being no longer free to users or universal.

    Anyone?

    Edit: Oh, Oliver! Care to have a crack?

    L

  4. MacDoctor 4
    16 July 2008 at 5:56 pm

    workplace accident rates are falling

    No, Steve, workplace claims are falling. Some large employers are now effectively self-insured, remember?

    our premiums are already among the cheapest in the world

    This is a common misunderstanding. Our premiums are, in fact, heavily subsidized. Where do you think the ACC levy on petrol is going?

    Part of the genius of ACC is in decoupling blame from compensation

    Agreed. And this did not change when National allowed competition into workplace insurance. ACC and the workplace insurer had to sort out exactly what a “workplace accident” was, but this is fairly well defined and caused little disagreement and little use of lawyers. Remember the guy who got stabbed in the company car park in a gang altercation? That is how precise the law is – cause is virtually irrelevant, place of accident is paramount.

    In short, all that happened last time was that we all paid substantially less premium. None of the problems you are suggesting eventuated – and they should have happened within six months of the change, if they were going to.

  5. higherstandard 5
    16 July 2008 at 5:57 pm

    Lew

    ACC is not free if you are an employer or an employee.

  6. Robinsod 6
    16 July 2008 at 5:58 pm

    Of course it’s about privatisation. Opening Post up to competition wasn’t because post has a great big infrastructure and a monopoly position. ACC has an infrastructure that could easily be replicated by pumping up the size of current private health care providers or handled by accident insurers over the ditch. I would imagine that a combination of national government led increased ACC premiums and undercutting competition would see it gone pretty quickly. then the real games could begin…

    Oh and hi blar – why are you posting as oliver now?

  7. Lew 7
    16 July 2008 at 6:03 pm

    HS: “ACC is not free if you are an employer or an employee.”

    Which is why I qualified it by saying `free to users’. I think my meaning is pretty clear: people making claims don’t get denied treatment because they might not be able to pay.

    L

  8. Lew 8
    16 July 2008 at 6:09 pm

    MacDoctor: “None of the problems you are suggesting eventuated – and they should have happened within six months of the change, if they were going to.”

    Elementary game theory provides a counter-argument. If a player knows that by taking an aggressive strategy straight away they might have the rules of a game changed upon them, they won’t take that strategy.

    In this case: private insurers would be insane to start undermining the system immediately and risk having the law changed back. If behaving rationally, they’d be very cautious – even to the point of tacit collusion – for the first several years at least, allowing the system to bed in and mature before implementing their full strategy. This is what’s known as `timing one’s run’.

    L

  9. Higherstandard 9
    16 July 2008 at 6:37 pm

    Lew

    I understand what you mean now – I’m sure you know that no-one in NZ is denied a first up consultation and treatment regardless of ACC and their ability or not to pay.

    Questions for you though – as per the Nats release on face value I can see absolutely no reason why there shouldn’t be a comprehensive review of the scheme, as long as it’s independent, with the possibility of introducing competition as long as there’s good legislation in place.

    Also having the DRSL converted to a completely independent tribunal seems a reasonable position take.

  10. Brett Dale 10
    16 July 2008 at 6:43 pm

    Finally some choice for NewZealanders, and not being told what we have to do by Aunty Helen.

    Because its come down to choice. Does anyone here really believe that a private company would treat customers the way the government run ACC does.

    How can anyone be against Choice?

  11. Anita 11
    16 July 2008 at 6:53 pm

    Awesome, National wants worker safety on the election agenda!

    So, what should we be asking for? What policies should we be seeing from parties bidding to showcase their worker safety focus?

    While increasing prosecution rates and encouraging union participation seem like an obvious solution at one end of the spectrum, I doubt they’re all the labour movement has to offer.

    Similarly I doubt that privatising accident rehabilitation and compensation is the only thing the business lobby has to offer.

    Any thoughts?

  12. lprent 12
    16 July 2008 at 7:03 pm

    How can anyone be against Choice?

    My choice is to be covered by ACC. Does this plan cover me for that. I don’t want my employer to select a private insurer who doesn’t pay up if I have a accident at work or get RSI.

    The last time the Nat’s did this, that is exactly the choice I lost.

  13. Dean 13
    16 July 2008 at 7:17 pm

    “In practice, that will mean Kiwis missing out on speedy treatment and income coverage, while Aussie insurers get rich.”

    Obviously your definition of speedy is different to mine. Particularly when it comes to how speedy the payments are to the providers of the care.

    I guess that’s something you’ve never looked into SP, or else you’d realise just how hollow and slippery your spin on this subject is.

  14. Steve Pierson 14
    16 July 2008 at 7:25 pm

    Dean. Speed is relative. The PWC study shows NZ has a speedy and efficent injury compensation system compared to other countries. Privatisation won’t make it faster, it’ll make it slower because there’ll be more law suits as companies try to avoid liability.

    And that is exactly what was happening in 1999. John Miller is one of the country’s leading ACC lawyers (ie he represents clients suing ACC over borderline issues around cover). He was my torts lecturer and he told us what it was like before ACC and how the same problems were re-emerging in 1998. Remember, he makes money off injury law suits, but he thinks privatisation is a bad idea becasue it ties up the judicial system and delays coverage. He was on National Radio the other day making the same point. http://www.radionz.co.nz/__data/assets/audio_item/0019/1626130/mnr-20080703-0820-ACC_Lawyer_Comments_on_Nationals_Policy-wmbr.asx

  15. vto 15
    16 July 2008 at 7:26 pm

    forgive my ignorance but is this not competition only in the employer (i.e. payer) part of the equation? I don’t imagine changing in any way the way I go about going to the doctor when I get injured and getting ACC to pay. Nor any question at all that my compensation will change.

    surely if I get injured I dont have to go to my boss’s ACC insurer. I haven’t even got a boss and I’m not a boss also so what would I do? Fall through the kracks?

  16. Steve Pierson 16
    16 July 2008 at 7:29 pm

    Brett. “how can anyone be against choice?”

    So are you for people having the choice to employ private security rather than pay tax for the Police? Because that’s what this ACC policy is like – you take a collective system (ACC, the Police,Defence etc) and its cheap and available to all – then you say ‘you can pull out if you want’, the rich and low risk pull out to save some bucks and the rest of the system becomes a greater burden on the taxpayer until it collapses… overall everyone ends up worse off.

  17. The PC Avenger 17
    16 July 2008 at 7:30 pm

    “Does anyone here really believe that a private company would treat customers the way the government run ACC does.”

    Of course not.

    They’d treat them worse.

  18. Steve Pierson 18
    16 July 2008 at 7:34 pm

    Remember how an insurer makes money – by maximising premiums and minimising payouts. Look at the US health system to see how people get screwed out of coverage for injuries by big insurers with lots who have the money and lawyers to avoid payouts.

  19. Dean 19
    16 July 2008 at 7:54 pm

    “Dean. Speed is relative. The PWC study shows NZ has a speedy and efficent injury compensation system compared to other countries. Privatisation won’t make it faster, it’ll make it slower because there’ll be more law suits as companies try to avoid liability.”

    Just because other countries may take longer than 6 months on average to pay out for government approved dental care doesn’t meant there isnt room for change, SP. Besides which, do you really think anyone would stick with a private insurer who chose an ACC provider that behaved in such a way? I guess you do.

    I understand that you’re all about waving large, private anything is bad coloured flags but really you might want to talk to private health care providers before you start painting a canvas in such broad strokes. Your propaganda does not match up with reality.

    I mean, you’re even spinning in your first paragraph in this post. The taxpayer would subsidise private ACC schemes? Who do you think subsidises the current one? I know you consider choice of anything the government doesn’t provide to be bad, but your reasoning is shonky on this one.

  20. Dean 20
    16 July 2008 at 7:57 pm

    “So are you for people having the choice to employ private security rather than pay tax for the Police? Because that’s what this ACC policy is like”

    The police are doing such a bang-up job too, aren’t they. I mean, I’m guessing you’d agree with Helen and Winston over the statements made by the asian community in east Auckland, right?

  21. Steve Pierson 21
    16 July 2008 at 8:05 pm

    So, Dean would privatise the Police as well as ACC. Guess we can see this isn’t a moderate policy after all.

    Dean. try to read the whole sentences and get their meaning. You allow private insurers to cherry pick and the taxpayer is left carrying the rest – ACC works so efficently because it is universal, undermine that.

    You bring down a system judged world leading by experts, and for what? A blind belief that the market is always best. You’ve no evidence that private insurers would do better, the international evidence is they do worse, and that $200 million in profits for the insurers has to come from somewhere, ultimately, it’s from the pockets of Kiwis.

  22. johndoe 22
    16 July 2008 at 8:20 pm

    Hey, guys. Fighting against this one is silly. If National can accept Labour policy without blushing, you should have a rethink about how you’re dealing here. Fixing ACC, which is, on the ground, universally known to be a fumbling, broken, top heavy system especially punitive to small employers and the self employed, should be high on Labour’s agenda. Taking some cues from the Nats and admitting that the system is weak in several key areas (sorry) might not be a bad idea. All this drawing into the second compound as the Nats surge over the first wall of defense is getting wearisome. The right response is not always disparagement.

  23. DSC 08 23
    16 July 2008 at 8:28 pm

    “‘The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in iniquity and born in sin. Bankers own the Earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough money to buy it back again Take this great power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this would be a better and happier world to live in. But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit’.’ – Sir Josiah Stamp, director of the Bank of England during the years 1928-1941

    Why?
    More cowards than individuals clogging arteries of self-government due to nature and distribution of power in current system.

    How?
    Douglas elaborated that for various reasons having to do with the process of production over time, there is always a gap in monetary terms between the value of what is manufactured and the purchasing power needed to consume it. Regarding the factors which cause this gap, Douglas wrote as follows in a 1932 pamphlet, The Old and the New Economics: “Categorically, there are at least the following five causes of a deficiency of purchasing power as compared with collective prices of goods for sale: 1) Money profits collected from the public (interest is profit on an intangible); 2) Savings; i.e., mere abstention from buying; 3) Investment of savings in new works, which create a new cost without fresh purchasing power; 4) Difference of circuit velocity between cost liquidation and price creation which results in charges being carried over into prices from a previous cost accountancy cycle. Practically all plant charges are of this nature, and all payments for material brought in from a previous wage cycle are of the same nature; 5) Deflation; i.e., sale of securities by banks and recall of loans.’

    To End the Rot:
    Douglas went on to propose that the production/consumption gap should be filled by distribution of a cash stipend called a National Dividend, which would actually be the proper share of individuals in the bounty of the nation’s economy and resources. These ideas merge with those of a basic income guarantee as a measure of economic freedom and justice promoted by many economists and advocates today.

    National Dividend, interest and inflation free, up to $14 K per citizen if no percentage used to pay off the national debt.
    This and other Democrats for Social Credit policies will end the hold of self-important experts in ruining what should be a good way of life enjoyed by all.

    DSC 08.

  24. Inventory2 24
    16 July 2008 at 8:47 pm

    Well said johndoe. As employers, I can say without fear or favour that my wife and I would welcome the opportunity to test the waters with a provider other than ACC. We may still elect to purchase cover for our employess and ourselves through ACC, but it would be nice to have a point of comparison. At the moment we have no option, and despite the fact that we have not made a single claim in five years of operation, our ACC levies have risen to a level where they are almost frightening.

  25. RedLogix 25
    16 July 2008 at 8:51 pm

    DSC08,

    Yes Douglas was perfectly correct.

    But you are not permitted to undermine the real centers of power. Therefore you are to be ignored, ridiculed and marginalised.

    If perchance you persist to the point of being an actual threat to the establishment, you will be dealt with.

  26. infused 26
    16 July 2008 at 9:14 pm

    What do you do Inventory2? I run a IT business so ACC is really nothing… I think my bill was $45 this year (self employed)

  27. Dean 27
    16 July 2008 at 10:53 pm

    “So, Dean would privatise the Police as well as ACC. Guess we can see this isn’t a moderate policy after all.”

    I love how you’re not willing to debate the reality of the situation such as the length of time it takes private providers to be paid and instead choose to attack the messenger.

    I’d say it was a total suprise, except that it’s not.

    How about you come back with some actual, real world experience past what you’ve read and then tell me I’d obviously like to privatise the police just because I don’t agree with your banal summary of ACC.

  28. Dean 28
    16 July 2008 at 11:00 pm

    “[it seems Oliver knows better than PriceWaterhouseCoopers who carried out a study of ACC and concluded it was very efficient compared to cover in other countries. Next, Oliver denies the IPCC’s findings on climate change because sometimes he’s cold. SP”

    And after that, SP will actually post a graph with a timeline of 0 on it to actually prove he understands how statistics ought to be represented.

    Steve, glass houses, stones, shouldn’t throw mate. You really really might think you’re being clever in the way you choose to debate people but in reality you’re being as clever as IB was when he called Craig Ranapia an Uncle Tom.

    PS, IB: I still have the screenshot.

    [IrishBll says: get a life dean.]

  29. Swampy 29
    16 July 2008 at 11:08 pm

    Of course, the paper you link to provides no proof of your privatisation claims, you are just making that up.

    You also as good as confirmed that low risk people are subsidising the high risk, why should this be acceptable?

  30. Swampy 30
    16 July 2008 at 11:17 pm

    “The last time the Nat’s did this, that is exactly the choice I lost.”

    Do you have a choice of your employer dealing with the IRD or numerous government departments?

    No. If you want choice like that, start your own business.

  31. Swampy 31
    16 July 2008 at 11:23 pm

    For all the people talking about $200 million in profit,

    show me proof that there isn’t at least, say, $50 million wasted through ACC being an inefficient government monopoly.

    When the government makes political appointments to the board you know there is not much chance of the thing being that well run.

  32. AndrewE 32
    17 July 2008 at 5:58 am

    Not to be too contrary or anything but weren’t we bashing Gerry Brownlee for arguing against even have an investigation into building trains the other day?

    National want to investigate if they can make ACC more efficient.

    A bit of balance chaps!

    [I had been waiting for this line. Well done, AndrewE. The response is this – a public service study is underway on building trains, Labour would like to do it but are waiting for the study. The investigation in National’s case is just a fig leaf – listen to all the National interviews and there is no question in their minds that privatisation of at least the Work account (and possibly other accounts) will go ahead. Noone doubts privatisation will happen under National, building trains may not happen under Labour, it will depend on the study – one is ideological the other is ambitious but pragmatic. SP]

  33. Lew 33
    17 July 2008 at 7:40 am

    johndoe: “f National can accept Labour policy without blushing, you should have a rethink about how you’re dealing here.”

    How on earth does this follow? National accepting some of Labour’s policies requires that Labour (ignoring the fact that many of the people here are declared not-Labour voters) should accept National policy uncritically?

    Tell you what: answer my challenge above as to why this is `fixing’ the system and not full privatisation, and I’ll concede it’s worth a look.

    inventory2: “As employers, I can say without fear or favour that my wife and I would welcome the opportunity to test the waters with a provider other than ACC.”

    With respect, this is begging the question: the policy does little or nothing to harm employers; it potentially harms the employed.

    L

  34. Lew 34
    17 July 2008 at 8:03 am

    AndrewE: “National want to investigate if they can make ACC more efficient.”

    This is a good point, and its framing value is an extremely smart policy decision from National. This question right here is what this issue will turn on, and the way it’s framed it’s impossible to disagree with. Anyone objecting to it discredits themselves by being anti-progress.

    The next question is: where are National going to get advice which will affirm a privatisation plan? I see that one of two things happens: National appoints someone genuinely independent to investigate the changes, who recommends minor changes not including competition and the deleterious effects I link to above; or they appoint someone from within the insurance-lobby, with a specific mandate for choice [sic] who will recommend what’s in the industry’s best interests. The smart bit about this is that those opposing it have to resort to this VRWC line, which also discredits them.

    However nobody’s actually yet been able to sketch out a future in which choice [sic] doesn’t lead eventually to privatisation, and privatisation to the end of free-to-users universal cover. I can’t abide that.

    L

  35. Matthew Pilott 35
    17 July 2008 at 9:20 am

    Inventory2, I don’t know what industry you’re in, but how would you feel if this comes about and you were in, say, the building industry. You look around for this ‘choice’ that should be available, only to find that ‘choice’ only exists for the high-profit low-risk industries. As a result of this, your premiums start to go up which will affect your business, but still no ‘choice’.

    Someone above (found it – Swampy) asked why it’s fair that a high-risk employee is subsidised by a low-risk one. This is not strictly true, there are different levies for different industries. Also ask yourself what would happen if the full cost of the risk were represented for the trades and industry. There would be two outcomes – all prices would rise as, for example, all sparkies put their rates up to account for it.

    The likelihood, though, is that those in a more precarious financial situation would “choose” to go without insurance, as illustrated by the US’ medical insurance situation. Bang, there goes universal cover; some people are risking their lives and livlihoods to make ends meet. How is that better than what we have now? How can that be justified for ‘choice’ for a few in relatively low-risk areas?

    So, in response to johndoe, just because National will go against their core principles in surrender to good policy on numerous fronts doesn’t automatically mean Labour should go against theirs. The PWC report was very ambivalent about the idea a few weeks ago, and if they’re not raving about it, I truly wonder how bad this policy is.

  36. Lew 36
    17 July 2008 at 9:52 am

    There’s one other aspect of this policy which bears repeating: the fundamental principle of ACC is that it is no-fault. The fundamental principle of the private insurance business model is that the person at fault bears the costs of an incident. These two principles are not, and never will be, compatible.

    No-fault is the abstraction which allows universal free-to-users cover. It simply couldn’t continue under a fault system, because of the way in which fault is determined: it’s time-consuming, expensive, technical and fraught with legal issues. In cases which aren’t clear-cut, victory tends to favour the party with the best lawyers. In cases where a workplace accident is arguably caused by an employee, this means that employee could in principle be liable for the full costs of the incident, its investigation and remedies.

    Therefore, under such a system, much of the insurance cost is displaced from ACC or its privatised equivalent onto personal liability insurance, privately taken. In the first place this means a transfer of cost from employers to employees – great, say employers. However if individuals need cover, then cover will become the norm and organisations will need more cover; they’ll be required to be covered for organisation liability as a condition of credit, for government contracts, etc.

    So it looks to me like a lose-lose.

    L

  37. Swampy 37
    17 July 2008 at 10:04 am

    Labour’s core policy is simply that ACC is another opportunity where Labour can have a government monopoly on a service. That’s all there is to it. All the spin is focused around that.

    ACC has an extremely political board with Ross Wilson of the CTU at the top. That shows the extent to which Labour would have it that ACC is just another government department.

    Part of it, of course, is just another opportunity to have a go at employers, which are characteristically portrayed as greedy profiteers by the CTU and Labour alike. When you see the manufacturers closing up shop and moving overseas, it’s a good sign they have had enough of the treatment they get here.

  38. Matthew Pilott 38
    17 July 2008 at 10:08 am

    “Labour’s core policy is simply that ACC is another opportunity where Labour can have a government monopoly on a service. That’s all there is to it.”

    No Swampy, that’s just your view. ACC is an example where a universal and compulsory system can provide for the people of NZ far better than a private and competitive system. Saying anything apart from that is just partisan spin.

  39. Oliver 39
    17 July 2008 at 10:09 am

    Steve Pierson,

    Just because something is very efficient doesn’t mean it can’t be more efficient. The NHW11 Toyota Prius that was released in 2000 is a very fuel efficient vehicle, but the NHW20 Toyota Prius that came out in 2004 is an even more efficient vehicle.

    Lew,

    If the legislation surrounding competition for ACC is done correctly it won’t lead to you dire predictions. Key has said that the same minimum cover must be provided and that insurers will not be allowed to merely cherrypick.

    Fianlly for all of you: NZ Post has been open to competition for a very long time now, has it been privatised?

  40. Swampy 40
    17 July 2008 at 10:13 am

    “a public service study is underway on building trains, Labour would like to do it but are waiting for the study.”…
    “listen to all the National interviews and there is no question in their minds that privatisation of at least the Work account (and possibly other accounts) will go ahead. Noone doubts privatisation will happen under National”…
    “building trains may not happen under Labour, it will depend on the study – one is ideological the other is ambitious but pragmatic. ”

    Labour would like to build trains, they can always find some more taxpayer’s money to spend on vote buying. The tax cuts are a sham because tax collection is still rising.

    Unlike yourself I have no concern about what National is saying in the media. I don’t have to put words in their mouth. I can do that to the Labour Party any time given their devious record.

    Now, which other countries in the world follow the NZ model of ACC provision?

    If you don’t like employers being able to choose insurers then make employees take out the insurance individually and they can choose who they want to be insured with. After all, this is where the primary benefits lie, to employees.

    National has at least said it is going to look at the way the scheme runs. Labour has got a closed mind. They will still want employers to insure because with their ideology it is a big stick they can wield against employers.

  41. Lew 41
    17 July 2008 at 10:14 am

    Swampy:

    Answer these questions:

    1. Do you think universal no-fault free-for-users workplace accident cover is important in NZ?
    2. Do you think such cover would persist under a privatised ACC scheme?
    3. Do you think opening up the Worker Account to private providers in the name of choice won’t result in eventual privatisation?

    Rationale for your answers would be nice, too, if you want them to have any credibility.

    I’m all for reforming ACC’s governance, if that’s where you think the problems lie. I’m all for streamlining small claims and incentivising workplace safety and other non-structural changes designed to make the system run better, without undermining it. This is not what choice [sic] will do.

    L

  42. Lew 42
    17 July 2008 at 10:25 am

    Oliver: “If the legislation surrounding competition for ACC is done correctly it won’t lead to you dire predictions. Key has said that the same minimum cover must be provided and that insurers will not be allowed to merely cherrypick.”

    How can National prevent cherry-picking (while providing the current minimums the policy promises) without compulsion and stringent regulation? Do you accept that to achieve these goals the competition scheme National proposes must contain a compulsion clause which forces any insurer participating in the Worker Account to a. accept applicants from any industry regardless of risk profile and b. regulate prices within certain (very strict) bounds? Do you think the insurance industry will accept these strictures?

    If not compelled by regulation to do so, insurers will offer cover at premium rates which are profitable to them. Because there’s a correlation between low-income/low-margin industries and dangerous industries, this would mean those industries would be priced out of the market, which is cherry-picking by default. They’d be left with the default provider (ACC). Go back and reread my 6-point schema and tell me what bits you think aren’t borne out by elementary behavioural economics and game theory.

    “Fianlly for all of you: NZ Post has been open to competition for a very long time now, has it been privatised?”

    Mail is an infrastructure service which historically loses money but is nonetheless necessary for civilised society. NZ Post currently makes money because of KiwiBank. You’re not comparing apples with apples.

    L

  43. Matthew Pilott 43
    17 July 2008 at 11:01 am

    “Fianlly for all of you: NZ Post has been open to competition for a very long time now, has it been privatised?”

    So have roads, as far as I’m aware. False dichotomy.

  44. insider 44
    17 July 2008 at 11:17 am

    Lew

    Re POst, isn;t it the other way round? I thought Kiwibank is falsely profitable because it is piggybacking on the NZ Post retail network at an unrealistically low cost.

  45. Lew 45
    17 July 2008 at 11:22 am

    insider: I haven’t seen the data; I’m working on anecdote (incidentally from John Key). As I understand it, the retail network is sunk cost (capital), so deploying further retail services in it has been extremely efficient. The postal business apparently loses money due to decreasing regular bulk-snail-mail volumes, and will continue to become less viable as, for instance, bank statements go digital.

    L

  46. insider 46
    17 July 2008 at 11:50 am

    Lew

    I too was going on anecdote. One of whcih was that NZ Post were actually doing well because of increased bulk mail due to advertising and marketing direct mail.

    Also re the sunk cost, yes but the point was that that has not been charged at a market rate and allowed Kiwibank far greater market access than it would have otherwise had – a cross subsidy.

  47. Felix 47
    17 July 2008 at 1:39 pm

    So Kiwibank gets a good deal, NZ Post gets a good deal, both get to provide the country with much needed services and everyone wins.

    Isn’t public ownership of assets neat?

  48. Ari 48
    17 July 2008 at 2:08 pm

    Questions for you though – as per the Nats release on face value I can see absolutely no reason why there shouldn’t be a comprehensive review of the scheme, as long as it’s independent, with the possibility of introducing competition as long as there’s good legislation in place.

    A review I have no problem with, but on matters of privatisation and degradation of public assets I don’t even trust the Nats as far as I can throw them.

    Competition with ACC would be okay, so long as the insurers must follow exactly the same rules as ACC- including the the inability to deny responsibility of cover, the inability to turn away high-risk customers, and fair pricing controls that don’t let them charge disproportionately for high-risk cases. However, I highly doubt National is envisioning equal competition between ACC and private insurers.

  49. Swampy 49
    17 July 2008 at 7:09 pm

    I’m just interested for someone to tell me why it is the employer’s responsibility to pay for ACC cover for their employees.

    If I want health insurance, I make my own choice and payment arrangements.

    The question of employer’s liability is amply covered by the existing OSH requirements and laws.

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