On Wednesday this week, Nick Smith is going to announce what amounts to the effective privatisation of a large part of ACC. You won’t hear the word privatisation uttered from his lips, he’ll use all sorts of other words like ‘competition’ and ‘market discipline’, but the effect will be the same. Accident cover for those injured at work will now be provided by the private, for-profit insurance industry. That’s privatisation.
What concerns me about this most is that the National government haven’t even attempted to produce a robust case to show that it’s a good idea. This is a purely ideological decision, based on National’s blinkered belief that the market will always deliver the most efficient outcome. But consider these facts:
- An independent review by Pricewaterhouse (Australia) found that our ACC scheme has the lowest administration costs of any comparable scheme anywhere in the world.
- Information provided to the Transport and Industrial Relations Select Committee showed that the cost per-worker of work-related accident cover in New Zealand is, on average, about half what it costs in Australia (is this what National meant by catching the Aussies?).
- Under the current system, if someone is injured at work and has to stay home, the first week of income compensation has to be provided by the employer. Following the Christchurch earthquake, the government waived that requirement and ACC covered the lot. They couldn’t have done that if work-related injury cover had been provided by private insurers.
- If a private insurer offering ACC cover collapses, it’s the taxpayer who will have to pick up the tab for any outstanding claims liabilities. So the private insurance companies have an effective fail-safe guarantee. We’ve already seen one ‘accredited employer’ collapse resulting in ACC having to pick up the bill, that will only get worse under Nick Smith’s privatisation plan.
- When HIH, a private Australian accident insurance company collapsed in the early 2000s, the Aussie govt had to pick up a $500 million tab. HIH had been offering accident cover under National’s previous attempt to privatise ACC, which was reversed by the incoming Labour government following the 1999 general election.
There are only two ways that private insurance companies will be able to turn a profit from offering work-related accident cover in New Zealand. Either they will have to reduce entitlements, or they will have to increase the cost of that cover. In other words, we’ll all end up paying more to get less.
Since National became the government, Nick Smith has gone to some lengths to manufacture a crisis in ACC in order to justify his privatisation plans. As I outline a last week, ACC is in pretty good shape and Smith’s scaremongering is pretty transparent. His moves to massively hike up levies in 2009 were designed to erode public support. If ever we needed proof of how cynical a move that was, we got it a few weeks ago when he started talking about levy cuts just six months out from a general election.
ACC isn’t perfect, but the comprehensive, no-fault, 24/7, universal cover it currently offers is the right approach for us to take. We should be focused on how we can improve what we have now, not how we can create more profit-making opportunities for National’s mates in the private insurance industry.
Purely ideology driven. If it is considered that the ACC scheme is faulty, then surely moves to fix it are preferable to selling it, but that is the easy option I guess.
The market and private industry DO NOT always have the answers.
The insurance lobby has had its eye on the more lucrative side of ACC for many years. ACC is envied in other parts of the world and PWC in 2008 could find little wrong with it. Taxpayers will be left with the expensive, high risk “patients” while the low risk, cheaper measurers will be covered and profitted upon by the insurance industry.
It’s not broken, it doesn’t need fixing and National has repeatedly lied about its viability. To be consistent, they need to bring back the right to sue for personal injury by accident if they are going to make such a fundamental change to the scheme. Of course they won’t, they will suddenly care about the “social” aspect of the ACC contract then…
Thin end of the wedge. If we let the for-profit health “Insurance” industry anywhere near our core health services we will end up with something akin to the epic fail in the USA. Have the Nats learned NOTHING?
Such fundamental changes should have been signalled in the Budget. If not why not? Pharmac is at risk and so is the purity and effectiveness of “our” ACC.
Why do Labour MPs feel part of their job is to announce National propaganda
For months we were warned about a Black Budget, that turned out to be a fizzer, likewise with this
Attack when it is announced and when you have the real details; anything else makes you look negative, the last thing a party so far down needs
@Chris not often i read such good news on red alert but this is fantastic! I can only hope you are right. Having been on the blunt end of rubbish ACC systems that were inherently inefficient and costly in design it is long overdue that the provision of this market service (which it is despite all the social contract rhetoric) be put up to a competitive market. This will save the taxpayer, employers and the public a small fortune!
Looking at the reasons you give for not doing this you offer extreme one off scenarios or suggest that the taxpayer should fund all to cover the risks of a private insurer failing. Of course if the private insurer doesn’t fail and most don’t) the taxpayer pays nothing. We have a lot of money tied up in a scheme that it shouldn’t be – this money could be better used to generate growth and wealth for all NZ’ers. The public have finally understood that snouts in the public trough is no way to build a brighter future. Unless Labour address this fundamental flaw in its policies it will continue to languish 20 points + behind in the polls.
It’s actually about jobs for supporters of NACT. Say Government spending and they simply ask how can they get a piece of the action? Self-interest not idealogy is the over-riding motive.
AS usual the “choice ” is only for employers the injured employees get the same compensation or declined treatment due to ‘degeneration’ as they got under ACC.
Alternatively a private profit driven company will insist that for lower premiums or any cover at all bosses will need to make sure their workplaces are safe. ACC cover any death trap knowing they can legislate for higher premiums to cover costs.
Also a private company will want an injured person to be rehabilitated as quick as possible as they are a big cost when they are off work.
With competition comes innovtion and as a self employed painter I welcome a bit of choice, I pay 2700 for me but I still need to buy income protection insurance and health insurance. I paid 1400 a year when there was competition for all 3, albeit back in the late 90s. We are a nation of small businesses and the self-employed and Labour should be appealling to these groups surely rather than just your mates in the unions.
thank-you Dr Smith, about time
So how do we complain about this decision?
is there a mandate in government to put this through?
I have been the fortunate (or unlucky) beneficiary of the ACC system, and I believe that the speed with which I completely returned to work was a direct result of the supports offered through the system.
I didn’t have to waste energy chasing claims or fighting for what I needed… I had an independent advocate to help get me all the things I needed to speed recovery.
I have seen my wife go through a privately funded system; theoretically offering the same level of service, but I assure you that the support and guidance to returning to health were not the same for her.
David, how many insurance companies have you belonged to which focus on prevention? Put a percentage of profit aside for education and prevention programmes?
“Also a private company will want an injured person to be rehabilitated as quick as possible as they are a big cost when they are off work.” ACC does this. You presuppose “quick” rehabilitation will be effective rehabilitation.
Perhaps I don’t give enough credit to this side of insurance companies? And you give too much? I worked as a lawyer for a few of the biggest insurance companies for about 4 years. That’s what I base my comments on, and other experiences thereafter.
@Tracey, all insurance company mitigate risks and are incredibly focused on prevention. I get a discount because I have smoke alarms and the car is alarmed, I pay more because I am a smoker for health cover.
ACC will cover me if I am high up a dodgy ladder but with private cover if I dont use proper scaffolding I know they wont cover me. It changed my behaviour when dealing with a private company.
I dont buy that companies will get the cheapest cover either seeing as it covers everyone at work including the boss and key staff as well the not so good ones.
David , as the you havent even had a quote from a private insurer and yet you are like Key banking all the savings.
My experience working in the private ACC market is that depending on who you talk to at one company the price will still vary enormously.
And yes they started in the market with low rates but it was only a year or so before the scheme reverted back to ACC , so just wait for 3 years and see if you are still pleased with your imaginary price.
Well said Chris . This is the kind of constructive use of your brainpower that parliament needs….with plenty of mileage in the house . The moment they raised the motorbike levies it was clear they were trying to make ACC more attractive to a buyer. They’ll sell anything that’s not nailed down, and the big ACT-Brash move is to get the numbers – and Banks in a good position – where Asset stripping can go ahead. Otherwise, Labour-allies- and Maori parties ( who want all the assets themselves ) could block it. Aided by some sensible Nat Mp’s who still want a career after 2014 .
The Labour co-alition should be giving most energy against this ruthless plan – emphasising foreign drain ( already 13-15 billion a year ) and the ease of share transfers….and the stupidity of owning something twice.
Note – the first reaction when AMI was in trouble was to draw up a formula by which the Gov could sell it !
Note – Is Len Brown fully up with the Asset Sale agenda..and sufficiently opposed ? He should be.
The upshot of the Americanisation of accident health care in New Zealand will be some miss out on cover, some get second rate health care, and some do just fine. And just like in the USA, we all know who the winners and the losers will be. People here know the American health system in broken, so why would they buy replicating it here for their accident health care? Weird.
Labour could stop asset sales and PPP’s in their tracks.
Say after me.
“Renationalisation without compensation when sales are not in the national interest”.
David, when did you last receive a pamphlet outlining a particular prevention campaign from your health insurance or employment insurance company, versus one from ACC.
I get a newsletter from my insurance companies, not directed at preventative measures, as an employer I do get stuff from DOL and ACC on prevention.
Do you believe we should be given the right to sue as the trade off for this move David?
I have been a client of the private system in Australia and I have had claims denied there and here. I would still rather have the ACC system anyway. The private system encourages employers to deny all injuries and require the workers to hire very expensive lawyers and hope for a positive outcome in the next two or three years. Until you win, you pay all your own medical expenses and cover your own loss of wages. It means that most workers in OZ don’t have any really cover. Here at least the system is cracked, but not broken. Don’t use the cracks in our system as a reason to throw the whole system to the mega corporations. Me thinks the winners will be them.
Interesting to read last night insurance companies using the “small print” and dictionary to avoid paying business owners in Christchurch. This will shock David to the core I would think.
I’ve read all over Nick Smith’s announcement and can’t find anywhere that we must do this because ACC can’t pay its way. Wasn’t that the opening move of this entire sorry saga?
yey!
My private insurer is the only one who cares for me.
I have very little money and thankfully got some, all be it very very limited health insurance. ACC don’t care. They’re useless.
Accountable to nobody.