As predicted by Labour, it looks like the government is getting ready to privatise areas of ACC.
An interim report from the ACC stocktake working group has said that opening up parts of ACC’s business to competition is workable. Minister Nick Smith was given the report a few days ago, but he’s keeping quiet so far.
National made a deal with ACT that in exchange for support for their last miserly ACC bill, passed recently, the government would open ACC to competition.
Anyone who experienced the disaster the last time ACC was opened up to private insurance companies will be steeling themselves up for a repeat of the terrible experiences of workers, health professionals and even employers.
The only people who benefited from National’s last foray into the privatisation of ACC were Australian financial institutions and the lawyers called in to fight legal battles. One of the major workplace insurance providers, HIH, later collapsed owing $1 billion.
Don’t be fooled by the rhetoric the government will use. What they call “opening up of ACC to competition” is actually “privatisation”.
National sees ACC and workers’ injuries and livelihoods as a tradeable commodity. Labour doesn’t.
We have said we will reverse any privatisation of ACC, but in the meantime, it’s coming our way.
Quite disappointing that the National is so pathologically ideological and hellbent on privatising ACC … or whatever euphemistic or fuzzy words they might use.
I really hope the insurers take the hint from Labour and back off knowing they could be closed in a few years and wouldn’t make any profit…
What they call “opening up of ACC to competition” is actually “privatisation”.
How exactly?
Anyone who experienced the disaster the last time ACC was opened up to private insurance companies will be steeling themselves up for a repeat of the terrible experiences of workers, health professionals and even employers
Would like to hear more about that, wasn’t really around…
“Anyone who experienced the disaster the last time ACC was opened up to private insurance companies ”
In my experience, the company I worked for was over the moon when it could allow an insurance assessor in to evaluate the risk in the business. Given the history of the company and the low number of work related incidents, the company was low risk and the premiums were set reflective of that risk. Compared to other similar companies in the same industry, it was one of the lowest risk because of excellent safety programs. I’m not sure what disaster you may be referring to? When returning to ACC, the premiums were tripple that of a private insurer. On top of that even entering the ACC Partnership Programme the max discount was 15% and worse still was that if allowed ACC to manage work place injury claims they were inefficient and poorly policed.
Darien – I agree the debate between describing it as opening ACC up to competition vs privatisation is merely semantics.
I have no issue with privatisation of the Workers Account as you well know as Labour put our levies up by 100% with 10 weeks notice. This means in the last 3 years we have paid between $2000-3000k extra per YEAR. That’s almost $9000 we could have put towards our mortgage, rates, petrol, groceries & house repairs. As far as we are concerned, private insurance for work related injuries would suit us perfectly and would also without question, result in a reduction in premiums as we would be rated according to our own claim history.
SO. What I would like to know is what was the Shipley government’s ACC model and what is the one on the table by NACT?
Is there a difference? And why are the so bad? Can you please provide some facts?
Why does Labour think that it would be any more unfair that our current ACC model that:
*refuses surgeries resultant of injuries caused by a accident
*makes sexual abuse victims jump through hoops then demand they go see someone of their choosing making the whole process all about humiliation rather than rehabilitation *charge self-employed people exorbitant levies then renege on their obligation to pay out or take forever doing so AND
*pay for a psychotic criminals new leg which he lost because he was deliberately shot by the police, which then enable him to nearly kill someone else…..all the while their bureaucrats get pay rise after pay rise…..!
Interesting that Labour has announced it will reverse any such changes to ACC yet still won’t say that they will reverse any GST increase….
Indiana – interesting. The guys who have been in our industry for a long time have said the same thing!
They haven’t said that they won’t reverse the GST either!
Three little letters . HIH
They went bust , soon after Labour took back the work place accounts.
They were a big big Australian work place insurer.
I used to work for them.
Yes the first years quotes were cheap , but they would rise, and if you had some claims you would have a massive rise to get rid of them .
employers get a choice of insurer but the employees get no choice. ie no right to sue
The reason GST wont be reversed is that retail prices wouldnt go down. !!
Look at all the nationals opposition to labours policys were they said they would die in the ditch , which they then quietly let stay. Much easier to do, 30 hours free childcare, student interest free loans, etc etc
On top of that, HIH’s big cheeses, Ray Williams and Rodney Adler, were convicted of fraud over the whole affair.
If ACC gets privatised, wouldn’t it put a foot in the door for a litigation industry? Then we’d probably be back to where we were as if Owen Woodhouse never existed.
The reason GST wont be reversed is that retail prices wouldnt go down. !!
I may be missing something but wouldn’t a reversal mean that businesses could easily undercut those not reducing their prices?
StephenR – that’s what I think.
ghost: interesting. But considering that self-employed pay more ACC for doing the same job as an employee then I would consider any changes that mean their levies go down as beneficial considering 80% of NZ is small business.
ACC may not be broke, but it sure is broken.
There are thousands and thousands of us that are fed up. If Labour doesn’t like NACT proposals then they better come out with some alternatives because the promise to reverse any changes carries little weight and little credibility given how low Labour rates in the polls and what a joke ACC is.
ACC is getting broken by NACT
It’s not the time for Labour to be saying what it would do, but you can bet they won’t be taking a sledge hammer to ACC!
if the employer has the right to choose his staff’s insurer then i want the right to sue the employer for negligence. Everyone knows there is huge amount of it going on, employers cut corners to avoid costs, as an example look at the Airlines desire to fly in volcanic ash, they new what happens, they know the decided upon response is not to fly if there is volcanic ash in the air, and yet they still fly.
Then look at the employers that put in there budgets for x number of deaths per year and have insurnce to cover these costs.
Business’s are in business to make money, hence the saying it was a business descision. A business descision that runs rough shod over people may be immoral, but it is still good business.
Lets go whole hog and adopt the USA model for health care and be done with it.
… Australian financial institutions and the lawyers called in to fight legal battles. One of the major workplace insurance providers, HIH, later collapsed owing $1 billion.
So what?
HIH was a multinational insurance corporation that fell apart because of fraud, plain and simple.
To suggest, as I believe you have done with this paragraph, that HIH’s failings are a consequence of their ACC coverage here in NZ, is completely absurd.
Waterboy has a point. Let’s closely examine the behaviour and performance of insurers in the world’s most well established and competitive health insurance marketplace, the US of A. Finding reasons and means to exclude people from cover is just a start. (Hence their recent healthcare insurance legislation).
ghostwhowalks – a very valuable and firsthand contribution to this discussion thanks. c.f. other people who know how all the pretty plans and ideas are supposed to work on paper but may be missing the nuances of the gritty in-practice reality.
Looking at this link from 2002, this really seems to be a merry-go-round. Not always that merry though.
http://www.beehive.govt.nz/node/13687
@ Phil – you really missed the point. HIH’s poor behaviour with regards to how it treated patients and increased premiums was the key part of ghosts’ post (IMHO), not any reference to its fraudulant demise. For you to try and move the conversation on is simply a distraction to the main point: that HIH did not treat its clients at all well nor act in their clients’ interests (regardless of whatever back office fraud was being concurrently perpetrated).
@ Loota. Note the italicised text is directly from Darien’s post, not Ghost.
I’m not trying to move the conversation on. I’m making the perfectly valid point that the way Darien’s post is structured, the casual reader would assume HIH’s failing was a consequence of their time in NZ private workplace insurance. This was not the case, at all.
Moderately tangential;
Can anyone on the left actually give me a good reason why workplace accident insurance is ’special’ and therefore requires government ownership and control, while every other form of insurance – home/contents/life/income-protection etc – successfully operate on a free-market basis?
I’m honestly struggling to see the difference.
I fail to see why opening up ACC to competition is a bad thing. So long as cover is maintained for all workers then I struggle to care who my employer uses as a provider.
One benefit is that it would help reduce the opportunity for a government to use ACC as an extension of the Welfare state as Labour did during their nine years.
Perhaps a leaner ACC would also have quickly stepped on the waste that is prevalant in ACC. As an example would their Property Manager who is currently under investigation by the SFO go away with what he did for so long if there were tight controls as is typically the case in a true corporate with shareholders? I doubt it very much.
Competition is a good thing – something Labour has much trouble accepting.
Phil and Monty I think you both raise really good points.
Labour has yet to convince me that privatising the workers account is a bad thing considering that as soon as they reversed the changes made by National in the 90s, premiums went up and it became a free-for-all for everyone bar those that actually needed cover. ( Rebecca, I am really not sure what this means, but it is totally inaccurate to say that ACC is a free-for all for everyone bar those who need it, Grant.)
Like I said earlier, Labour’s threat that they will reverse any changes if re-elected in 2011 is a fairly empty one given how badly they rate in the polls and further, it’s just another example of political point scoring which results in nothing but more instability and cost to the taxpayer.
Labour got voted out because many believed they too much of our money and further, wasted it.
Declaring you are going to reverse changes that many see as long overdue (e.g. ACC & the tax cuts) are unlikely to translate into votes come election day in 2011.
HIH was not a ‘multinational’. Its biggest lines of business were in workers compensation and the cause of its failure were many, no one said the NZ side of things was the cause.
The fact would be if it had being going say 10 years , 000s would have been affected since they would have been in limbo, and in Australia the State steeped in to guarantee some payouts. How ironic is that.
AIG went bust recently as well. So expect many more insurers to go under as the idea of low risk well established companies goes by the board
Can anyone on the left actually give me a good reason why workplace accident insurance is ’special’ and therefore requires government ownership and control, while every other form of insurance – home/contents/life/income-protection etc – successfully operate on a free-market basis?
Sure Phil. While I can’t claim to speak for the left, I can say what I think.
The reason that ACC is not the same as a private insurance, such as content insurance is if an individual loses their property, and are not insured that is a personal tragedy, from which, should that individual have an income, they can rebuild from.
If an individual is injured, and are not supported to quickly recover, that becomes a cost to the community via the state. Until they are able to work again the community is to provide a Sickness Benefit. If no financial aid is given the rehabilitate the injured individual, that person, and anyone who depends on them, become an ongoing cost to the community. While the cost of the benefit is less than the social and economic cost of not paying the benefit, the community is then saddled with the on going cost of the individual, and any people financially dependent on that individual. So why shouldn’t the community organise through a social contract to take the responsibility to rehabilitate the injured itself, since ultimately the cost of failure to rehabilitate will fall upon the community.
Under a privatised system, although it would be the insurance companies responsibility to pay out on their obligation- if the company doesn’t live up to its responsibilities* the negative consequences will be worn by the taxpayer.
Once you add to this that the private insurers will only be interested in the most profitable business they can cream from ACC, leaving the ACC to carry the most expensive cases, the community as a whole will be no better off and quite probably worse off because in the best case scenario the role that ACC is doing now will continue with the additional cost of the Insurance companies’ profit margin.
So, ACC serves a public good, and should stay in public hands. My view.
*Bearing in mind that the difference between fees charged and the money paid out on claims is where the companies get their profits. To illustrate, here is a recent story from the US about a large insurance company increasing its profits by avoiding its responsibilities.
Sean you explain your point well. The only thing that appears to be missing is that we are talking about private insurance for the workers account – that is, work related injury cover only.
My understanding is that there is no immediate plan to privatise the non workers account – that is, the non work related injury cover (from sexual abuse to injuries from domestic violence, road accidents & recreational sports etc).
Of course Rebecca, but workplace injuries, left insufficiently treated, will cost the community. So I believe it should be kept as a community responsibility. What works for workplace injuries works for all cases.
Those other areas you mention, except one, there are no immediate plan to privatise them but I believe that the motion of this government is to privatised those areas that will be profitable to a private insurance firm.
The exception I was writing of is that of sexual abuse victims. There was a strong move few months ago by this government to remove ACC support for victims for sexual abuse. So, if a woman was left traumatised by a sexual assault, or a series of sexual assaults, she would have to find the funds for psychological treatment herself from somewhere. She may not be in mental condition to earn the funds herself, but that was to be her problem.
The government may have changed its position on this, if so, I missed the announcement.
“So, if a woman was left traumatised by a sexual assault, or a series of sexual assaults, she would have to find the funds for psychological treatment herself from somewhere”
This happens all the time now Sean as ACC make it near impossible for people – men & women to get help. They make a time-consuming and humiliating experience so many women who are able to scrape together the funds for the $150 per hour sessions with an appropriate therapist do so themselves.
ACC as it stood before the changes was next to no help for most sexual abuse victims.
I know this personally as do many of my friends – with 1 in 4 women being abused by the time they are 16 most fly well under the radar.
ACC as it stood before the changes was next to no help for most sexual abuse victims.
I have not personally gone through this process, but I’d imagine under private insurance companies this would not improve. Obviously, ‘under the radar’ is where many sexual abuse victims fly, this would make it very hard to get service from a private provider.
When a claim is made on fire insurance, the insurance company quite sensibly wants to be sure that there was a fire. If a person claims for sexual abuse, the company will want to know for certain, that the sexual abuse happened. The victim would then be recommended to the company’s preferred supplier, just as insurance companies have preferred panel beaters.
Add to that the fact that insurance companies make their profit by charging as much as they can, and paying out as little as they can get away with, well I can see victims going a long way before they get any sort of support from a private supplier.
@all – you’re doing a great job on the arguments in this debate. I’m reading, and will comment when I have a minute or two!
@ Rebecca :
I’ve got the figures from the Parliamentary Library and I am unable to confirm what you are saying. Perhaps you and I should have an off-line.
Thanks Sean – very much appreciated.
I personally don’t find the argument compelling enough, but it’s food for thought and now up to me to see if I can work out why I disagree. Anyway; Cheers.
One pedantic point though:
…that the difference between fees charged and the money paid out on claims is where the companies get their profits.
This is only partly true. The money received in premiums is invested prior to payout, so during the interim that money is invested in various interest/income generating assets – from Gov Bonds to RMBS. This forms the vast majority of Insurance industry profit (or loss).
with 1 in 4 women being abused by the time they are 16
I hope you’ve got some hard data to back that up. I suspect it suffers from self-selection bias.
Otherwise, that is a massive call to make off the cuff.
Hi Darien – just have a look at the rates for the levy code 61100 in 2006 vs 2007.
100% is a slight exaggeration. The actual increase was 94% increase.
ACC did a ring around in about August 2007 warning us of the increase that would be payable in November of that year, yet could not explain why the levies were going up.
I wrote letter to the head of ACC and ACC Minister at the time Ruth Dyson – both of whom gave vague replies pertaining to the so-called leveling out of the employer vs self-employed accounts. Translation: corporate rates went down and the contractor rates went up…..and then Labour has the audacity to imply that only NACT look after big business!
Sean: sexual abuse claims are not and are unlikely to ever be subjected to privatisation.
But even if it was, I would find it hard to believe that getting reimbursement for counseling or therapy fees would be any more difficult than it is now!
In terms of your view that “Add to that the fact that insurance companies make their profit by charging as much as they can, and paying out as little as they can get away with” I think this depends on who your insurer is.
Our insurers all have top ratings and have been very fair in the way they charge their fees – our business one (huge company) has put their rates up for the first time in 6 years and have always paid out claims very quickly.
Re Grant Robertson’s moderation of my comment that ACC is a free-for-all: that really is a matter of opinion, surely I don’t need to go and list the almost infinite number of people that have had huge issues with ACC?
A sad example is my neighbour who has a broken back due to a fall 10 years ago and desperately needed to have a path/ramp & wet shower put in her house as she can no longer walk and was essentially becoming housebound.
After 6 months of waiting for ACC to approve their claim they took out a loan and paid for it themselves (using ACC approved insurers). They are still fighting to get their money back 18 months later….
@ Phil, thanks for the clarification.
Rebecca said: Sean: sexual abuse claims are not and are unlikely to ever be subjected to privatisation.
But even if it was, I would find it hard to believe that getting reimbursement for counseling or therapy fees would be any more difficult than it is now!
I do believe that this speaks to Sean’s point that private insurers will only want the most profitable parts of ACC’s portfolio, not the most complex and expensive parts.
As for your next comment – you may find it hard to believe but perhaps that is simply because you are not familiar with the tactics that private insurance companies use. They don’t just know every trick in the book on denying claims and denying coverage, they wrote the book. And you can be sure that private insurers are far more expert and determined at finding reasons to deny claims and deny cover than ACC is currently.
Just study the tactics that US health insurers use to deny claims and deny cover, they are truly masters of the art form.
As for your sad example of a neighbour: have you been through your neighbour’s case notes?
If not, then you only know what she has told you in conversation and not what ACC, her doctors and specialists have assessed, diagnosed and decided upon. How do you know that based on these medical reports that ACC has not done exactly the right thing in not paying for a path/ramp and wet shower?
Anyway, why are you citing the case of a neighbour struggling to get paid out by ACC when you are trying to make the point that “ACC is a free-for-all”?
Doesn’t your example show that ACC payouts are not a free-for-all at all and hence speak against your own point? :confused:
I’ve read the March 08 Price Waterprice report in full, several times. I have yet to see how this Government considers that report is flawed.
So more of our money will get filtered out of NZ? I assume the major insurance companies take their profits offshore?
@ Tracey. Yes. So does Telecom. In fact, any time a large foreign owned company operating in NZ declares a quarterly or annual profit from its NZ operations, most of that money will be moved overseas immediately (or will already be there).
In other words, we lose capital from these shores which could otherwise have been put to productive use in our economy.
It takes a lot of tonnes of Fonterra milk powder to compensate for ANZ or BNZ shipping their quarterly NZ profits offshore.
In my baby lawyer days my firm acted for a number of large insurance companies. They do not make money paying out on claims. I agree that those who think ACC is hard on soe claimants, look out.
I also agree that private insurers are not going to touch the touch stuff/areas. Taxpayers willbe left funding the hard stuff.
Loota: as stated above, claims depend entirely on who you are insured with; some companies a clearly better than others.
And why this constant comparison to the United States, a country with 300 million people, as an argument to keep ACC as it is? How about we compare apples with apples -how many other small countries like NZ have an ACC system where the taxpayer pays a fortune and gets very little back?
Yes I have read my neighbour’s case notes – she has had letters approving her claim, they have just yet to pay up. Ironic considering their claim first went to ACC under Labour and now Ruth Dyson has been busy asking the house why ACC has been refusing 80% of all shoulder claims…..!
In terms of calling ACC a “free-for-all” my entire sentence read: “as soon as they [Labour] reversed the changes made by National in the 90s, premiums went up and it became a free-for-all for everyone bar those that actually needed cover.”
The only people who DON’T have a problem with ACC are those who have never had a problem with them – that is, never had to pay a fortune for cover and then find that when the time comes they make you jump through hoops.
I can’t wait for the workers account to be privatised as our insurance company is fabulous: our premiums will be lower and they have always been fantastic with paying claims.
In terms of your comment “and you can be sure that private insurers are far more expert and determined at finding reasons to deny claims and deny cover than ACC is currently.”…I find that VERY hard to believe. Proof please.
@ Phil: the rate quoted is a well known FACT in NZ. More accurately it is a rate of between 1 in 3-5 girls depending on the number of women that come forward. There is loads of data on this, easily accessible even if you haven’t worked in this area (like I have). Just look up MSD’s social reports or the Children’s Commission reports.
Here’s a couple of links from the rape crisis groups to help you out:
http://www.rapecrisis.org.nz/content.aspx?id=76
http://www.mrsac.org.nz/index.php/research-and-statistics
Anyway, as stated above, where are the FACTS that can show skeptics like me that privatisation of the workers account will be worse than the currently very broken, overpriced ACC system?
@ Phil my long winded reply has gone into moderation for whatever reason so I will just reiterate some of it here and say that yes, the stat I gave is FACT.
I actually found your comment extremely offensive. Next time you may want to try googling these kind of facts for yourself before questioning them as it is not an issue that people tend to embellish just to get a point across on a blog site!
@M onty – I see your nice profile picture has gone.
“Labour got voted out because many believed they too much of our money and further, wasted it.” – I thought they did a good job
Another question for everyone: ACC is fully funded until something like 2014 with both NACT and Labour talking of wanting to push this out until 2019 – translation…further increase in premiums!
If the Workers Account does in fact get privatised, do the private insurers receive the funds already collected by ACC?
Rebecca said: And why this constant comparison to the United States, a country with 300 million people, as an argument to keep ACC as it is?
This comparison to the US is for a simple reason: because it serves as a warning as to the profiteering behaviour of health insurance companies.
Do you seriously mean your comment that the public “Gets very little back” from ACC? I guess you’ve never had someone close to you have ACC help to pay for medical treatment, for x-rays, for specialist attention, work hardening or return to work programmes, pain management, accident prevention training or providing income support when unable to work for extended periods of time?
The NZ public get plenty back if you actually take those activities into account.
And lets not even go into the savings from the no-blame non litigation environment that ACC has helped create. Win win win on that front.
But I do understand now that because you feel so strongly that ACC gives us so little benefit as a society you are all for stripping it back.
You also said:
I can’t wait for the workers account to be privatised as our insurance company is fabulous: our premiums will be lower and they have always been fantastic with paying claims.
“Fabulous”, “fantastic” wow you really like your insurance company to shower them with such high praise! Out of interest, how many of those claims that they have been involved with involved weekly compensation for more than six months? Or involved a case of complex or chronic post treatment injury due to medical care resulting from an original claim through you? Because a few sessions of treatment for a sprained ankle are a no brainer. But how an insurance company deals with someone who is a chronic, complex case that is costing their business thousands of dollars a month may be quite a different matter. I am sure that you would want to get such a client off your businesses’ books, right Rebecca?
With the example of your poor neighbour being mishandled by ACC and your glowing reports of your “fabulous” private insurer, it seems clear that you know who would look after the interests of your neighbour better.
You also said:
In terms of your comment “and you can be sure that private insurers are far more expert and determined at finding reasons to deny claims and deny cover than ACC is currently.”…I find that VERY hard to believe. Proof please.
Look, my reply is: logic please. One one hand, you believe that private insurers are far more competent at dealing with claims and coverage, but on the other hand you DON’T believe that they have the expertise in denying those same claims and coverage in order to maximise profit?
So which is it…are private insurers more competent at the insurance business than ACC is or not? Because if they are you should find it very easy to believe that they can drive greater profits from the system by.
Glad we could agree that ACC is not a free-for-all though. For a second you made it sound as if it is standard ACC practice to let people who didn’t have a legitimate claim through while denying everyone who did, like your poor neighbour whose case file you thoroughly reviewed as a favour, who you say has formal ACC claim approvals in writing but for some reason strange reason they haven’t actually paid on those claims.
@ Rebecca: If the Workers Account does in fact get privatised, do the private insurers receive the funds already collected by ACC?
Oh! That would be a nice little lump sum cash windfall. Insurance companies will be lining up around the block waiting for the hand out!
Just a note to everyone, ACC is not an insurance scheme.
@ waterboy: A mechanism to administer a social contract between the Government and the people of NZ then?
Rebecca, you asked
“In terms of your comment “and you can be sure that private insurers are far more expert and determined at finding reasons to deny claims and deny cover than ACC is currently.”…I find that VERY hard to believe. Proof please. ”
ACC has an element of a social contract, a socialpolicyif you like built into its philosophy, foundation or intention. INsurance companies have no such obligation. As a ruleof thumb, if insurance premiums are lower than a competitor (for here read ACC) they are usually covering less items/incidents.
*I* had problems with ACC yet here I am championing it. I dont restrict my comparisson to the US, I take the pricewaterhouse approach and compare ACC with many countries and many schemes. Apples with apples is by definition difficult because we are the only country with a scheme like ACC. It isnt perfect and it does work. Private insurers arent perfect and they can work. If you and others herehavent read the PWH report, I urge you to take some time. The summary is not huge.
ACC isn’t perfect but I do not want to throw the baby out with the bathwater.