We still pay, ACC or no ACC

Written By: - Date published: 10:01 am, October 13th, 2009 - 25 comments
Categories: ACC, national/act government, privatisation - Tags:

acc-undermine-200Labour’s David Parker has been a bit slow reacting to National’s latest attack on ACC but now he’s in play he has a killer point to make:

if ACC cover is cut, the costs of what was paid for by ACC will still have to be paid for by society somehow.

The treatments and lost income that ACC covers won’t magically disappear if National cuts cover. Instead, we’ll just have to pay the cost some other way. And it’s likely to be more expensive.

What people tend to forget is that ACC was set up to save New Zealand money and it does an incredibly good job of it. Rather than having employers pay some profit making private insurer for workplace accident insurance, and workers paying for income insurance, and people paying for insurance against them and their families getting injured outside of work it’s all covered by ACC. Nobody misses out here and has to try to cover the costs themselves or find someone to sue (if they can afford it). While other common law countries have court systems stagnated by personal injury litigation, we avoid nearly all that trouble and let the court system deal with more important issues because every one gets cover if they’re injured. In fact the only people who don’t win from ACC are the private insurers – they’ve successfully fought off similar initatives in other countries and here they’ve given millions to National.

So, what costs will we have to cover some other way if National cuts cover? Well, their first targets are physiotherapy and therapy for sexual abuse victims. What will happen when people can’t get ACC cover for these treatments? Well, some will be able to pay for themselves, but many won’t. Instead, their injuries will go untreated and things will often get worse at cost to them, which is a cost to society as a whole. It will be left to charities to try to cover the gaps that should be filled uniformly and fairly by the State.

Their injury may even lead to loss for others. Check out this interview with a man who was sexually abused as a child and is now getting therapy through ACC. What if he had remained effectively self-medicating through alcoholism? We would have borne the cost when he got liver disease or crashed his car into a family.

The cost doesn’t disappear just because the ACC entitlement is cut. We have to pay sometime and, then, the cost is likely to be greater.

25 comments on “We still pay, ACC or no ACC ”

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  1. Lanthanide 1
    13 October 2009 at 10:46 am

    I posted this in the open mic thread, but I’ll re-post here as its relevant.

    On National radio this morning they were saying that the date for ACC fully funding is going to be put back to 2019, as well as raises in levies and cuts in entitlements.

    How does this gel with this comment from yesterday’s article on ACC:

    “Now, it is going to be harder to complete the move to being fully funded by 2014, which is the Government’s target, without increases to levies. Pretty simple solution to that, push back the date. Labour was going to move the date back to 2019 and the Government has just announced it will adopt that idea. Take ten years to move to fully funded rather than doing it in five. It makes no real difference except there’s no need for big levy hikes.’

    It is implying that all we have to do is put the date back to 2019 and all the problems are solved, yet the government is going to do that *as well* as raise levies and cut entitlements? Why should they need to do that, if pushing back the date to 2019 is enough in itself, in your estimation?

    If your answer is “they’re doing it to build mistrust in the public in ACC’, then you’re saying ACC doesn’t actually need the money and that in a few years time ACC is going to have more extra money than it needs, and the levies in the future will therefore go down due to overfunding at present. If ACC does indeed actually need this extra money, how do you reconcile this with your position that “ACC is fine’?

  2. lprent 2
    13 October 2009 at 11:04 am

    L: There is a transition going on from a pay as you go approach to ACC in 1999 to pre-paid one. This means that when a person has an accident, that the money to pay for their ongoing treatment has already been paid. The 1999 system did not do that.

    Like superannuation it didn’t put the forward cost onto those who were caused / had the accident – it pushed it onto their kids and grand-kids. That either results in inter-generational theft (because the generations have different cost structures and priorities), or people going into poverty because they or their employer or sports club had an inadequate scheme.

    Transitions in a funding system can be taken over time and will involve either capital injections or increases in levies in the short term. Unlike the superannuation where this government has abrogated its responsibilities (removing the contributions to the Cullen fund from next year is inter-generational theft), the ACC system is gradually moving to being fully funded. Provided that the transition keeps moving, the time scale difference between5 years and 10 years is of little difference.

    The main thing of interest in this is it points up a big education hole. Many of the right commentators (including the minister Nick Smith as I’ve commented before) appear to have severe maths handicaps. They simply make basic mistakes about the numbers when politically expedient.

    • Lanthanide 2.1
      13 October 2009 at 11:10 am

      Yes, I understand all that. I want to know why Marty is asserting that the only thing that needs to happen is the date moved out to 2019, and that that move by itself is enough to keep levies the same.

      The government is going to do that *and* raise levies *and* cut benefits. So clearly Marty, or the government, is wrong. Obviously the government may have ulterior motives, but I’m sure they also have a lot more information and data about the real situation than Marty does, so I want to know how he reconciles the difference.

      • lprent 2.1.1
        13 October 2009 at 12:15 pm

        L: Perhaps if the government actually released the information that they are using to base the decision on. At present what they are releasing is heavily spun to a political conclusion. They aren’t trying to justify their PR spin by giving enough information about problems, they’re only interested in getting the spin lines out.

        But from my brief look at public reports from the ACC, I can’t see what Nick Smith is going ballistic about. With the exception of some blowouts in the budgets for physio (which is the ONLY reason I’ve ever used ACC – for some preliminary OOS from a lousy mouse), I fail to see anything that looks like a problem. With the physio, I’d like to see some information about what it has saved in potential costs because of prevention. I’d suspect that if I wound up with actual OOS it’d be somewhat more expensive.

        Nick Smith looks increasingly like a hysterical panic merchant. Just look at his lying ‘contribution’ to the ETS debate.

        • Lanthanide 2.1.1.1
          13 October 2009 at 1:05 pm

          “Perhaps if the government actually released the information that they are using to base the decision on”

          So until such time, perhaps Marty should stop presenting his opinions as fact?

          This reminds me of around budget time when Marty was repeatedly saying that we weren’t going to get a credit downgrade and nothing had to change. I guess he knew more than the actual people who make the decisions and have the overall view of the economy and who talk to the ratings agencies, then? Then, as now, he presented his opinion, not backed by any expert opinion or quotes, as fact.

    • BLiP 2.2
      13 October 2009 at 12:36 pm

      Jon Bridges put it succinctly on National Radio yesterday when he said:

      “Over the rest of my life I will owe $2 million of power bills. Have I got $2 million now? No. Am I in trouble? No.”

      If a comedian can sum up the situation in 25 words you’d expect there would be at least one media commentator who could get it.

  3. insider 3
    13 October 2009 at 11:11 am

    What you are discounting is the possibility that some people are using ACC services when they may not be necessary because it is ‘free’. SO we end up funding an overcautious system that encourages referrals and follow-ups not always all needed

    So the payments equate to a massive transfer of wealth from salary earners to counsellors, doctors, physios etc Cutting back the opportunity might mean that treatment is more focussed and those professions have to work a bit harder for the next new car.

    • lprent 3.1
      13 October 2009 at 12:22 pm

      Reinterpreting your comment… You forgot to complete it…

      So the payments equate to a massive transfer of wealth from salary earners to counsellors, doctors, physios etc instead of having even larger costs to society going to lawyers and late treatments causing higher payments to counsellors, doctors, physios after the lawyers

      In terms of overall costs, ACC is one of the cheapest systems worldwide because it treats problems early without having to go through a drawn-out legal process in almost all cases.

  4. Lew 4
    13 October 2009 at 11:13 am

    Two cracking posts on ACC in a row, Marty, you’ve found your calling.

    To put a figure to one part of that cost: AUT senior lecturer in Business Interdisciplinary Studies Shirley Jülich, in her 2001 PhD thesis, put the total annual cost of the consequences of childhood sexual abuse in NZ at close to $2.5 billion. This is an order of magnitude higher than the annual cost of psychotherapy that survivors consume, and which the new clinical pathways are going to ration.

    L

  5. burt 5
    13 October 2009 at 11:27 am

    So…

    The treatments and lost income that ACC covers won’t magically disappear if National cuts cover. Instead, we’ll just have to pay the cost some other way. And it’s likely to be more expensive.

    Last time we were given temporary freedom from the tyranny of monopoly one size fits all money-pit sponsoring my levies and the levies for my company went down. I had more cover and it cost me less. (I picked a size of cover that fitted me rather one that was easy to administer for a monopoly)

    Guess my low risk business wasn’t subsidising some other business that politically it was unacceptable to make them pay their full cost least they don’t vote for the govt that refused to socialise their costs on everyone.

    • snoozer 5.1
      13 October 2009 at 11:40 am

      It’s called loss leading, burt. You might have heard about it in your finance class.

      The insurers entering the NZ market wanted to get as much market share as they could, so they loss lead. It wasn’t sustainable.

      Either they would have had to deny a hell of a lot of cover (which is what US insurers spend about 10% of thier income doing), or they would have had to raise premiums, or the businesses would have collapsed.

      In fact, the biggest private insurer in NZ during that period HIH did collapse only a few months later.

    • burt 5.2
      13 October 2009 at 11:54 am

      snoozer

      I think it’s called basing your costs on an actuarial model rather than a political acceptable level of socialisation to stay popular and win elections.

      But we will need to agree to differ on why it cost less under a private scheme because I’ve got to go for a bike ride on thousands of dollars worth of mountain bike, taking extraordinary risks preparing for a race I want to win in a few weeks.

      I’m happy that you (assuming you pay tax) are helping cover the rehab costs from my last major spill a month or two back and the high volume physio costs to get me back in form for the race in a few weeks time. Broken bones are such a pain but treatment is free and they heal well if you manage to bump a waiting list patient getting an operation because you are ‘urgent’.

      Oh, cheers for your financial support covering the costs of the risk associated with my high risk recreational activities. I could not afford as much cool mountain bike kit if I had to pay insurance to cover my own risk as well.

    • ghostwhowalksnz 5.3
      13 October 2009 at 12:12 pm

      You cant have a size of cover of employers liability insurance that ‘fits me’
      The payouts are regulated ( one part of competition they didnt indroduce).
      And yes they were building market share so low premiums were offered to the low risk employers. Just one accident and you would pay till your nose bleeds
      Based on the Australian experience, their premiums are higher where they have ‘competition’ and court based decisions

  6. ieuan 6
    13 October 2009 at 11:41 am

    ‘Their injury may even lead to loss for others. Check out this interview with a man who was sexually abused as a child and is now getting therapy through ACC. What if he had remained effectively self-medicating through alcoholism? We would have borne the cost when he got liver disease or crashed his car into a family.’

    I fully believe that treatment should be available but why is this funded via ACC? It’s not an accident. ACC has become a secondary (health) tax and I’m not sure that is what it was originally intended for.

    • Lew 6.1
      13 October 2009 at 11:47 am

      ACC provides (nominally) universal no-fault personal injury and liability cover. The word ‘accident’ is branding more than anything else. A ton of stuff which isn’t accidental is covered (such as the impacts of crime, which is what sexual abuse survivors have suffered).

      L

    • snoozer 6.2
      13 October 2009 at 12:02 pm

      ieuan. Yeah, the cost has to be covered by us somewhere, which makes taking it out off ACC pretty pointless, eh?

      Anyway, ACC covers injuries in general except, I think, those you intentionally inflict on yourself. Mental trauma is an injury and it’s not something the victims intentionally give themselves.

  7. BLiP 7
    13 October 2009 at 12:18 pm

    Oh – now I get it: pay more, get less.

    Thanks National Ltd® – I’m lovin’ it.

  8. rave 8
    13 October 2009 at 1:59 pm

    This is fat white abusers rule,
    the ones who fuck their kids in the head
    and then say pay for it when you get a job,
    if you get a job, if you don’t die first.
    Actuary-rilly speaking intergenerational
    abuse is getting too expensive,
    so lets make the victims pay.
    In the old days we used to work the bastards to death,
    or shoot them if they were the wrong color or religion.
    But its cheaper if they top themselves.
    So lets have our sex and make them pay for it too.

  9. Killinginthenameof 9
    13 October 2009 at 6:27 pm

    This is getting me really angry. Nick Smith and co are out right lying about the financial state of ACC.

  10. Maria 10
    16 October 2009 at 2:34 pm

    Kia ora tatou, so lovely to come out of the trenches of this battle and read your sane and thoughtful responses – it means so much dear blogsters. From your pens to the minds of the nation I say! Arohanui, Maria

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