Pruning ACC

The Government is reported as looking to end free physiotherapy and medical misadventure claims, in an attempt to protect employees from having to hand over an extra $27 a week into ACC.

I have always believed very few things should be free (to the user) – it totally fucks up the normal incentives around deciding on how necessary something is. Free physio is a perfect example of why this is so:

The free service was budgeted to cost $8.9 million extra a year when it was introduced in 2004.

But physiotherapy costs had gone from $58 million a year then to a projected $139 million this financial year.

Dr Smith said these costs were expected to increase further, to $225 million by 2011/12.

So the cost of physio has increased 800% more than projected since being made free.

But is it paying for itself by a healthier workforce:

Officials had told him there was no evidence the free physiotherapy service had increased rehabilitation as it was intended to do.

But maybe it has to stay free, to help poor people:

Since becoming free, use of the service had “occurred disproportionately in higher socio-economic areas”.


Other free things that should go are interest free student loans (but not this term as have promised not to) and free off peak travel for pesnioners.

I have heard stories of transport operators milking the free off peak travel programme. You see they get paid for every person who travels. So the are huge amounts of money advertising to pensioners to come travel for “free”, as a way to boost income for them.

A lot of the problems in the tertiary sector with scam courses would have been solved with even a minimal $100 minimum free for every course.

Anyway back to ACC:

Up to 50 extra ACC entitlements introduced by Labour were being reviewed.

They included those introduced last year, such as cover for mental injury arising from traumatic workplace events and weekly compensation for seasonal and casual employees.

Dr Smith said he would be making changes to the ACC board – chaired by former union leader Ross Wilson – which “needed a fresh start”.

There was an “underlying culture issue within ACC in that it has shifted from being an operator to being more of a welfare system”.

And then of course we have Labour:

Labour’s ACC spokesman, David Parker, said the changes would force New Zealanders to take out private accident or pay from their own pockets for entitlements the cut.

Umm Mr Parker – if the employee levy increases to 4% of gross income, then that is going to take a shit load of money from NZers pockets. As detailed:

* An average household earning $67,028 with two cars now pays $938 a year for the earner’s levy and $510 for motor vehicle levy – a total of $1448.
* In 2013, National says the same household will pay $2681 for the earner’s levy and $1170 for the motor vehicle – a total of $3851.
* National says the household will face a total increase of $2403 a year ($46 a week) in ACC levies.

So Labour is happy with the average household being whacked for $46 a week more. That’s real caring.

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