Should ACC be extended to illness?
March 19th, 2013 at 9:00 am by David FarrarNicole Pryor at Stuff reports:
Sick people are more likely to be out of work and have money problems than injured people, says new research.
A study from the University of Otago, which has been published in Social Science & Medicine, compared over 100 stroke victims under 65-years-old with 429 people who had a similarly debilitating injury.
Both groups were followed for one year to compare their standard of living under the ACC system and means-tested benefits.
Under the Accident Compensation Corporation (ACC), injured people could get up to 80% of their weekly wages while recovering, as well as treatment and rehabilitation support.
Sick people could get treatment costs, but no compensation for lost wages beyond limited means-tested benefits.
There is a huge variation between those who have accidents and those who are sick. This even extends to situations that if you are born disabled (say with one leg) you get far less support than if you lose a leg in a car crash.
McAllister said at the very least there needs to be better income support for people with illnesses.
“For years people have been saying how unfair this is, the two quite different systems, and that just because someone has the misfortune of having an illness, rather than an injury, they have greater financial consequences.”
She said another option could be to extend ACC to cover illnesses.
While the disparity is a problem, the proposed solution could be more of a problem.
The first is that ACC premiums would increase massively. Every employer and employee would be paying more into ACC.
The second is that the whole basis for ACC was for accidents, and the no faults system was in return for removing the possibility of expensive lawsuits to determine compensation. That rationale does not apply for sickness. You can of curse get income protection insurance to cover the possibility of lost income due to illness.
Is it better to have one government run income protection scheme for illness that is compulsory or competing ones that people can choose to be in?
Finally look at the growth in even the sickness benefit by those who prefer not to work (of course not all or even most, but a significant minority). Think of the incentives if the sickness benefit is effectively set at 80% of your previous earnings? Especially consider that many people are on the sickness benefit due to alcohol or drug addiction. Do we really want to pay people 80% of their previous wages to remain an alcoholic or drug addict?
[UPDATE: According to MSD 7% of sickness beneficiaries are there for substance abuse, so not as many as I thought. Still a reasonable number. Also around 40% are due to psychological or psychiatric conditions which may have a substance aspect to them as the data records primary reasons only - not all reasons.]
So yes there is a disparity and a problem. But the solution is not extending ACC to illness. There could be merit in taking a more integrated approach to accidents and illness but it has to be an affordable one that doesn’t provide bad incentives.
March 19th, 2013 at 9:04 am
No, would become an absolute gravvy train. We have to have private insurance work somewhere.
Vote:March 19th, 2013 at 9:06 am
Bad things happen. The solution is not always that the government intervenes.
Vote:March 19th, 2013 at 9:07 am
Hmm. What’s easier to fake – sickness or injury?
Vote:March 19th, 2013 at 9:13 am
No, No, No. ACC is already expensive enough.
Vote:March 19th, 2013 at 9:14 am
Why don’t we all stop working, put our feet up and wait for the next welfare cheque?
Vote:It couldn’t get more absurd.
March 19th, 2013 at 9:17 am
Perhaps McAllister hasn’t heard of sickness insurance. After all, there are people in Christchurch who hadn’t heard of house insurance.
Vote:March 19th, 2013 at 9:23 am
Isn’t it the premise of ACC is wrong in that it removes the ability to sue in the case of you becoming disable through someones elses fault while being compensated for injuries sustained through your own idiocy that creates the anomaly?
Vote:March 19th, 2013 at 9:23 am
to be honest DPF apart from highlighting the stupidity of some journalist is this really an issue worthy of debate?
Vote:March 19th, 2013 at 9:30 am
I don’t believe we need ACC, let alone ACC for illness.
The administration of ACC is costing us a fortune. The double administrative process created by accident victims presenting at hospitals and then ACC having to be billed etc is ridiculous. When ACC was bought in during the 70′s its intentions were admirable, however it soon became a beast – that failed to fulfill its intended purpose.
Put everything back into the medical system. Use ACC investments to upgrade that system where needed. Get rid of the administrative nightmare, that includes specialists adding extra to charges when dealing with ACC patients.
Simplify it. If you have an accident you visit a doctor or go to hospital, who then refers/treats you. The govt pays the basic costs, regardless of whether accident or illness. You want special treatment – you pay for it or insure yourself. (You’ll have extra because you won’t be paying ACC premiums)
IF unable to work, you get the minimum sickness benefit for the minimum period (if you can’t pay your mortgage, tough – you should have got insurance with the difference that used to be paid with ACC premiums).
The savings made from the double administration can offset the added welfare cost. The ACC investments upgrade the hospitals etc.
K.I.S.S. – the only way to go – and cheaper too.
Vote:March 19th, 2013 at 9:31 am
Oh dear. The academics don’t quite get the fact that ACC is NOT welfare, despite the last Labour government’s attempts at change. It is a compensation scheme in lieu of personal injury litigation.
Vote:March 19th, 2013 at 9:39 am
Slight off topic but the “no fault” element of ACC is a myth if you are an employer. DOL will routinely prosecute for employee accidents and the courts will routinely levy damages to go to the employee (on top of ACC payouts). So we have changed private tortious liability for state-funded “insurance” PLUS court awarded damages.
Vote:March 19th, 2013 at 9:45 am
Of course, you can have everything you want if you are prepared to pay for it.
Vote:Typical me me me attitude – great socialism.
I want – you pay.
March 19th, 2013 at 9:45 am
The Law Commission recommended extending ACC to cover illness as long ago as 1988.
And, yes, it would require significant levy increases, but the significant increase would be to the earner levy. The employer levy already covers most work-related diseases and infections – these already attract cover under the ACC Act unless the primary cause is workplace stress.
What some commenters here may not be aware of is that ACC imposes very strict rehabilitation requirements, and claimants who fail to comply (i.e. refuse to attend specialist assessments, refuse to cooperate in developing an individual rehabilitation plan, or refuse to carry out the rehabilitation interventions in their rehab plan) have their compensation suspended until they do comply.
For someone with a drug or alcohol dependency that is preventing them from working, the prospect of being dumped from 80% of pre-injury earnings to a welfare benefit subsistence (or nothing if they have an earning partner) would be a pretty strong incentive to undertake rehabilitation. At the moment they just languish on a benefit, with no incentive to undertake rehabilitation.
Vote:March 19th, 2013 at 9:45 am
When I was in Germany in the 80s, as a foreign student, I had to have compulsory medical insurance that covered me for everything. At the time it was 60 Marks per month, slightly less than NZD60. There was no involvement of employers into the bargain. They of course didn’t have a scheme such as ACC, but that would cover it here. I’m not sure how insurance companies would view someone being born without a leg, but in most cases, illness would be covered by income protection. I have income protection insurance and it costs an absolute fortune, and there is a 1 month stand down before it kicks in. It is of course for long term illness.
Judith: if ACC was abolished we would end up having a legal nightmare instead, with employees suing their employers and that would end up only benefiting the legal eagles, and bogging down the legal system. So, if you want the legal nightmare that exists in the US with people suing all and sundry because they slipped on someone else’s floor and broke an arm or burnt themselves because their cup of tea was too hot, you know where the airport is.
Vote:March 19th, 2013 at 9:48 am
@toad,
You actually don’t see the inherent contradiction in what you just said do you?
That some who today would languish on the benefit would not languish on the benefit if threatened with languishing on the benefit if they didn’t stop languishing.
Vote:March 19th, 2013 at 9:51 am
I’m sick of work. Soon there’ll be a queue of government agencies waiting to pay me – MSD, DoL, ACC. I wonder where the money comes from?
Vote:March 19th, 2013 at 10:01 am
No. I this were to happen we should expect ‘illness’ to rise and with it increased strain on the healthcare system… which is already well beyond being fixed by simply throwing more money at it.
Government is the problem. Less government is the solution.
Vote:March 19th, 2013 at 10:07 am
Actully the original concept of ACC included illness but the Govt of the day implemented only the accident side.
But what ACC does is create a huge injustice between people who are injured and those who contract incurable disabling diseases like Parkinsons, Multiple Sclerosis, Epilepsy etc where the injury victim gets 80% of his wages and the disease victim a life sentence on a benefit.. the difference is hundreds of thousands of dollars over, say twenty five years. Remember too that the vast majority of injury victims recover all or most of their quality of life.
However, one has only to look at the explosion of mental illness to see how unaffordable it would be to include illness and disease in ACC. Indeed the inclusion of mental illness as a result of sexual abuse or even witnessing an accident into ACC has made the scheme even more unfair and ultimately unaffordable.
Get rid of ACC, make private accident and illness insurance a condition of employment and let the Govt revert to its proper place as a regulator and an insurer of last resort.
JC
Vote:March 19th, 2013 at 10:12 am
Sickness is clearly different than accidents… there’s always a cost to being off work, and as others have said, with “accidents” there’s the issue of whether it is some incompetent, negligent, liable bastard’s fault. ACC if it worked properly would be a nice solution for accidents, better than everyone suing everyone else over spilt milk / the drop of a hat IMHO.
As for sickness, the village should take care of its sick – even savages in the jungle seem to appreciate that.
I’m not sure if “taking care of the sick” should mean everyone flogs themselves in order to pay someone who’s sick 80% of their former income in perpetuity though…?
What we should have is some kind of Public health system to treat the sick, and some kind of sickness benefit to keep the needy from starving while they convalesce.
Wait – don’t we already have that??!?
Vote:March 19th, 2013 at 10:29 am
Oh – and those who choose to pay for private insurance cover should clearly receive some kind of tax rebate if they are not using the ACC “insurance” net…
Vote:March 19th, 2013 at 10:44 am
@Judith. As usual, you completely miss the point: ACC originated to get lawyers out of the system. Nevertheless, much of what you say is true – there is a two tier system of medical care that is ridiculous.
Perhaps the way forward is to restrict ACC to accidents involving other people. Car collisions, or work accidents, like falling off a faulty ladder. This should be about compensation, not medical care. Medical care should be in through the existing universal system.
People who slip on a bathmat at home should receive medical care in the system, as for illness, and not receive compensation.
One thing is for sure, no other country has copied the ACC system.
Vote:March 19th, 2013 at 10:54 am
no, ACC should not be extended to illness.
we have income protection or mortgage protection or key person or a number of other covers that provide for loss of income.
and funnily enough, despite paying commission to advisers and being a profit making product, its still cheaper than my less likely to pay out ACC cover.
i would much much prefer to opt out of ACC cover and just have my income cover. my insurer charges me as if ACC wont pay anyway (as ACC will weasel out whenever they can), so my premiums are unlikely to go up much.
also ACC is much worse for you on recurrent issues.
If you have an accident (lets say on the shoulder) and then a few years later due to that accident, you cannot work. you run the risk of it being called ‘degenerative’ and not a result of the initial injury so they wont pay.
conversely, once you have income cover in place if you are off work for any reason, and then it recurs down the track, they still pay out. if it recurs within a certain time frame of being fully recovered you can even skip your waiting period.
and if you earn more than $113 000 you can actually cover that under IP, but not under ACC.
ACC is a dog. it is not insurance, as insurance is risk rated and underwritten. it is welfare pure and simple.
RRM, some forms of income protection cover are tax deductible, but thats nothing to do with ACC, just how the benefits are paid from the cover.
Vote:March 19th, 2013 at 11:05 am
GJKiwi, – over the past few years the insurance companies have re-weighted the premiums based on wait periods.
4 week wait is much more expensive due to the increased chance of claim (and essentially got loaded by most of them). dropping to an 8 or 13 week wait period reduces the premium dramatically, and as most insurers pay in advance now, it is not as bad as it used to be. of course you have to have cash reserves to cover that time, so talk to your adviser to see if its right.
whats interesting is, as an adviser what the disparity between the bank products and proper insurance products are.
if you exclude ASB (who simply sell you Sovereign badly with no advice), then the only bank who has an income product that even rates on the independent ratings i use is westpac, at 57% of the top companies. the rest (esp ANZ) are so bad they dont even rate.
of course they are cheaper which only matters up until claim time and you find out your ‘cheap’ policy is cheap for a reason. Summary, see a good non-tied adviser, especially if you are self employed.
Vote:March 19th, 2013 at 11:14 am
On the sidetopic of US courts:
I once read an article by a US lawyer describing his experiences in suing for slips and falls. He makes the point that pretty much all US juries on a slips and falls case start with the attitude that the accident was the plantiff’s stupid fault and no-one else’s and they generally have to be shown clear evidence of wrong-doing by the defendant before they will find for the plantiff.
The McDonalds coffee cup incident was a serious breach of safety by McDonalds and would have resulted in prosecution by the Labour Department here. It wasn’t an ordinary cup of hot coffee which is normally 50-60oC but a scalding hot cup that was above 90oC. People who think their cups of coffee, tea whatever are consumed boiling hot are simply wrong, which was also the error made by the McDonalds management in assessing the original complaint.
Vote:March 19th, 2013 at 11:14 am
What ACC covers is mostly decided by case law now. Go digging deeper into some of the recent cases to see how far the expansion has already gone. Also, if you thought that ACC was there to stop lawyers making a killing? Well I’m afraid that’s far too late. ACC is lawyered to the hilt. I’d love to see some OIA figures on how much of ACC’s spend is on lawyers.
Vote:March 19th, 2013 at 11:14 am
Yes yes yes… Lets do this. If I sit and smoke 5 packs of cigs a day and get so sick I can’t walk – ACC will give me money to pay for people to deliver cigs to me… No fault and all that….
Bring it on … Nanny – complete and total care with no responsibility …. socialism … got to love it – This will win votes for political parties that rely on giving away other peoples money to be popular.
Vote:March 19th, 2013 at 11:50 am
Australian is in the process of developing schemes to cover both injury and disability.
http://www.dpc.vic.gov.au/index.php/featured/ndis/a-national-injury-insurance-scheme
http://www.ndis.gov.au/
Vote:March 19th, 2013 at 11:59 am
ACC was a great idea when courts were choked up for years with claims resulting from accidents.
The Lefties have used is as lever for socialism, with compensation for “mental” injury, and now want to extend it to illness.
Vote:March 19th, 2013 at 12:41 pm
Yes, as I said, no other country has copied the ACC system. The ACC covers all accidents on a no-fault basis, even medical misadventure and being frightened or unhappy, and prohibits suing for damages except where (gross) negligence can be proved.
Vote:March 19th, 2013 at 1:11 pm
Grendel @ 10.54 I agree entirely; I would opt out of ACC and have income insurance in an instant. ACC is welfare; pure and simple. Typical socialist largesse. I had hoped National would have at least brought in competition.
Vote:March 19th, 2013 at 1:52 pm
The big problem about this is that ordinary workers will pay through their noses in ACC premiums, and you’ll get masses of people who simply don’t want to work ripping the system off. Very similar to what happens with ACC currently (my wife has done some ACC law work and its a real eye-opener), but it will be an order of magnitude worse. Its far easier to pretend to be sick longterm than it is to have fake injuries long term.
Vote:March 19th, 2013 at 1:54 pm
Another false hope and a lie from pinko Labour lite.
Vote:Blame greenie Nick Smith and spineless Neville Key for the back-down.
March 19th, 2013 at 2:08 pm
Manolo, didn’t they say they were going to, or would ‘look at it’? I can’t remember now.
There’s still time! Maybe they’re leaving the hardest till last
Vote:March 19th, 2013 at 2:18 pm
Illnesses such as bipolar affective disorder, severe personality disorder, severe anxiety disorder and severe depression may give rise to a need for support with daily living activities
Vote:March 19th, 2013 at 3:28 pm
@cha. You state the obvious. The ACC might cover “frightened”, “unhappy”, but only as the result of accident, watching an accident, or abuse, real or imagined.
The argument is whether ACC should be extended. The answer is no, it should be restricted to “proper” or “real” accidents and then only for compensation – loss of earnings, limbs…
Take medical care away from ACC. All treatment, for illness or accident, should be covered by the universal system. Then there is no difference between illness and accident.
Vote:March 19th, 2013 at 3:42 pm
“Finally look at the growth in even the sickness benefit by those who prefer not to work (of course not all or even most, but a significant minority). ”
So I see that David Farrar already adjusted his figures, saying that according to MSD only 7 per cent of sickness beneficiaries have primarily substance abuse conditions (presumably incl. alcohol, NZ’s drug of choice number one). Not even 2 per cent of working age persons receive the sickness benefit, as far as my figures from MSD a year or two ago tell me, and the number is only slightly higher for invalid’s beneficiaries. When the government and WINZ and their minister give the numbers, they never mention that the population has also increased substantially over the last 10 to 15 years.
And for the ones on SB with mental illness conditions, it requires a medical practitioner, a psychologist or other specialist to diagnose and assess a person to be “fit” to work or not. So David’s assumption that getting a benefit on health reasons is a matter of “choice” (“prefer” is the word), this is rubbish. Those that manage to dramatise conditions before their doctor will be a tiny minority, but they get the media and Paula Bennett’s attention, of course.
Most with psychiatric and psychological conditions have complex health issues, so if substance abuse may play a role, then it would not be the only and major one, if not listed as primary condition.
The sickness benefit is no different to the dole in amount, so who chooses to live off just over $ 200 a week rather than work and earn real money? I am afraid some here are ranting on again about stuff they do not even know about, they love to have prejudice and bias, that just fits their wishful thinking.
I would opt for government policies that actually assist people who are sick to get treatment, where possible, but addiction treatment and psychological counselling are very expensive, and otherwise also very limited. No wonder psychologists and psychiatrists are on the preferred migrant lists!
NZ is a sick society, but even this government will not deliver. Just look at the new plan for mental health and addiction treatment for the next five years, called “Rising to the Challenge”. No extra funding, patients to help themselves and more mass medication and “e-treatment” (patients to sit in front of a computer and read or interact) are the cheapo, rather ineffective “treatments” being discussed. So more will just rot away in misery, like it has been for many years!
Vote:March 19th, 2013 at 4:09 pm
If ACC would be extended to sickness, then levies may rise, but also would welfare expenses be reduced, so the change would not be as dramatic as some may think.
Placing conditions on sick that have treatable illnesses and conditions could motivate for health improvements. Incentivisation is the idea, not just stupid, draconian, punitive sanctioning. But then the treatment must also be offered, which it is not really happening much for a range of health issues, particularly mental health and addiction. Where services like counselling are for “free” (i.e. subsidised), staff working in such providers are also often not the best skilled and qualified. I have enough information on this.
As for health care to deliver better outcomes, it often seems to me, that the outsourcing and privatisation of service delivery has led to a lot of individual operators, who set up own clinics, trying to maximise their incomes by charging handsome treatment fees and accounting for endless expenses. If there was more centralised service delivery by specialists employed by state funded agencies, the costs may be lessened and fees streamlined. Synergy effects could be used to deliver more economically.
Just bear in mind that meat processors in Southland, and Federated Farmers, are now wanting to form a kind of collective like Fonterra is for dairy farmers, to bring forces together, to achive better outcomes, rather than compete at self-destructive levels.
I think many mistakes have been made in health care. Residential treatment centres for addiction sufferers were closed all over the place in the 1980s and 1990s. Other mental health patients have also been released into the community, with not always good results. A rethink is needed for ACC and wider health care and funding.
Vote:March 19th, 2013 at 7:56 pm
Interesting subject. Of course its obvious I would have thought that we actually aready have that suystem in place via taxation. The issue really is the management and the extent of the payments etc.
A while back we had discussions on employment benefits and unemployment cover. Its patently outrageous that a person can work for many years and pay their paye but the moment they get laid off from that employment they are disentitled to unemployment benefit because their spouse is also working and being paid a wage.
This an inherent unfairness in the system.
Surley we should collect an unemployment premium during employment so that a person who become unemployed can be covered by a suitable amount.
If that makes sense and it does then it follows that the same should be done for illness. After all a woman may work for years and then get breast cancer. Why should we not have a fund that says well you have contributed to the fund and you are now very ill. We will recognise that and support you for X weeks at X rate.
After all we do collect this money now but unfortunately it goes to consolidated fund for pollies to waste elsewhere and is not available to those whose partner remain in employment.
Dedicated collection would be one way of preventing their stealing and waste whilst actually supporting those that earn the money in their time of need.
Vote:March 20th, 2013 at 6:38 am
I am in the middle of a conversation with Southern Cross Medical Insurance.
Vote:When you go overseas as many New Zealanders do Southern Cross medical does not cover you.
They like you to keep paying, and if you are away for less than two months they insist you pay but they will not insure you.
You have to go across to Southern Cross travel, pay them, and this is where it gets interesting.
If you become really ill overseas Southern Cross Travel will repatriate you to an airport in New Zealand where you will find that Southern Cross roll you out on the tarmac, and that’s the end of the contract. Southern Cross NZ will then deny you cover, since the condition was contracted overseas. Well they say ” it depends” . mm. Catch 22 anyone. Insured with the same Company twice but no cover. Die in the ditch.
March 20th, 2013 at 6:46 am
Further to above, I asked Southern Cross if they could develop a more comprehensive policy covering overseas travel. Even I said if it were significantly more expensive
Vote:They said they would like to. But if a person becomes unwell in Los Angeles for example, he or she is just a target for absurd expenses.
They Southern Cross have some authority in New Zealand and can deal with our specialists here, but they do not want million dollar expenses coming from LA greedy hospital. This is why those travel insurance policies will send you home. But it is at this point I think Southern Cross need to accept liability.