Full funding for ACC a political swamp that must be drained

A press release from the Council of Trade Unions

The CTU welcomes indications by two political parties that they would abandon "full funding" of ACC claims and return to pay as you go with a substantial reserve, CTU Economist Bill Rosenberg says.
"We would encourage the government to use its current review of ACC funding methods to review full funding", he said.
"Full funding has proven to be a political swamp because the funding target rises and falls by as much as annual levy payments. This is a result of changes in assumptions about discount rates, investment returns, rehabilitation rates and cost inflation. It provides excuses for political swamp dwellers to alternate between cries of 'ACC funding crisis' and 'unaffordable levies' without a real basis for either."
In addition building the reserves required for it has been a major driver of rising levies.
Full funding has no practical purpose for a publicly provided service backed by the government. Unlike the New Zealand Superannuation Fund, it does not provide for future generations. It just covers the highly variable estimates of the cost of current claims.
Even a major event like the Christchurch earthquake "will not have a significant impact on ACC’s overall financial situation" according to ACC's own Statement of Intent, and outstanding claims are estimated at just $52 million compared to the total $2.8 billion claims budgeted for in the year to June 2012 and total assets of $24 billion. A sensible level of reserves would cover such situations.
"ACC's history shows that the biggest risk it has to cover is the political risk of opportunist or hostile politicians undermining its credibility. An adequate level of reserves would insure against that and major disasters. The huge reserves required for full funding are simply a burden on the economy."

http://www.scoop.co.nz/stories/PO1206/S00266/full-funding-for-acc-a-political-swamp-that-must-be-drained.htm

ACC changes could return $1b to workers

An article from Stuff by Vernon Small

Changing the way ACC is funded could give a $1 billion windfall to workers and businesses and free up billions of dollars in reserves that could be used to cut government debt or fund the Christchurch rebuild, Green MP Kevin Hague says. The Greens back a change to "pay-as-you-go" funding for ACC.
Labour ACC spokesman Andrew Little has also called for a public debate about the option and the Council of Trade Unions and ACC lobby groups have weighed in with calls for change.
ACC Minister Judith Collins has not ruled out dropping the current "full- funding" model. However, yesterday she appeared to back away from that, saying the Government "does not want to burden future generations of New Zealanders with the cost of injuries that occur today as well as the cost of their own injuries".
Under full funding, the corporation sets levies above the annual cost of claims so it can build up reserves to also cover the future costs of existing claims. It aims to reach that goal by 2019, and currently has investments of $19.5b and a net liability of $4.5b.
Little said his calculations, based on pre-2009 levies, suggested about $1b could be sliced off annual levies under a move to pay-as-you-go funding.
"Since every wage and salary earner and every business pays it, it will have a noticeable impact."
In the current year, ACC expects to collect $5b in levies from workers, employers and motor vehicle owners and pay out $2.8b. Little favoured leaving the existing reserves with ACC.
However, Hague said the reserves could be reduced to about $6b - enough for a buffer of two or three years. The remaining $14b could be used to "even out the distinctions" between illness and accident-related cover, cut debt, invest in capital projects or help pay for the Christchurch rebuild.
"We could make much better use of the dollars than keeping them in uncertain investments," he said.
A change was yesterday backed by lobby group ACC Futures Coalition. Spokeswoman Hazel Armstrong said private insurers needed full funding to cover claims, but it was not appropriate for a public agency such as ACC. It had been used to create "a false sense of crisis" at ACC.
Pension and retirement expert Michael Littlewood has long campaigned for full funding to be dropped, and today CTU economist Bill Rosenberg said full-funding had become  "a political swamp" that needed draining. The funding target rose and fell as a result of changes in assumptions about discount rates, investment returns, rehabilitation rates and cost inflation.
"It provides excuses for political swamp dwellers to alternate between cries of 'ACC funding crisis' and 'unaffordable levies' without a real basis for either. In addition building the reserves required for it has been a major driver of rising levies."

© 2012 Fairfax New Zealand Ltd

http://www.stuff.co.nz/business/7137311/ACC-changes-could-return-1b-to-workers

Suicide danger in ACC delay: expert

An article from the Waikato Times by Maryanne Twentyman

A Waikato survivor of sexual abuse has been waiting seven months for ACC to determine whether he is eligible for counselling, a time frame which could have resulted in suicide, according to a Hamilton expert.
The man was recently told that his psychologist was now waiting for confirmation from ACC as to what should be written into his report, according to Male Survivors of Sexual Abuse Waikato manager Mike Holloway.
"When the man contacted ACC to see what the hold-up was he was told his paperwork had been `misplaced' which isn't uncommon," Mr Holloway said.
The situation was last week inflamed when information was released about an independent ACC report that referred to "draining the swamp" in cutting back services.
The report, obtained under the the Official Information Act by Labour acting ACC spokesperson Maryan Street, said ACC had "gone too far towards customer focus" and needed to begin "tightening the gateway by reducing the level and costs of treatment provided".
"Perhaps the most disturbing and callous phrase used in the Morrison Low report was the need for ACC to `significantly cut back to essential and core services only – effectively draining the swamp'," Ms Street said.
She claimed that the report highlighted a need for ACC staff to adopt a "tough love" approach.
"The report made it clear that if staff did not turn down enough claim applications they would get the sack," Ms Street said.
But ACC chief executive Dr Jan White said that was "absolutely ridiculous and untrue.
Dr White said the phrase "draining the swamp" referred to ACC's corporate office, not clients, and was written by a consultant, not ACC.
The report and subsequent controls put in place by ACC have outraged Waikato ACC advocate Quentin Mines.
"If you were to add up the dollars that claimants take from ACC it's a tiny sum compared to where ACC does not pay out where it should," he said.
Hamilton man Bruce Gardiner, who fought ACC over compensation for emotional trauma following an incident in which a man was killed after running under the milk tanker he was driving, said the report did not surprise him.
"They (ACC) are rotten to the core and the money they save would be a drop in the bucket compared to the money they spend on lawyers to get rid of cases like mine," Mr Gardiner said.
"ACC refused to accept my situation. For me it was an accident and it cost me enormously trying to prove my point in court," Mr Gardiner said.
But Dr White said ACC was governed by legislation that determined who was covered and who was not.
"We adhere closely to that legislation and provide services to meet our responsibilities.
"Clients have access to a free and independent review process if required," she said.

http://www.stuff.co.nz/waikato-times/news/3362909/Suicide-danger-in-ACC-delay-expert

ACC clients renamed ‘swamp-dwellers’ under new tough love approach

A press release from the Labour Party by Maryan Street

Injured New Zealanders will be appalled by the culture change taking place at ACC which has been advised to be less ‘customer-focused’ to begin ‘draining the swamp’ of ACC clients, says Labour’s acting ACC spokesperson Maryan Street.
"The information is contained in two reports released to Labour under the Official Information Act, as part of its Government-directed ‘Value For Money Review’ and explains why increasing numbers of injured New Zealanders are suffering extremely shoddy treatment from the corporation and being declined cover they are entitled to.
“The reports, prepared for the new ACC board last year, say ACC had ‘moved too far towards customer focus’ and needed to begin ‘tightening the gateway by reducing the level and costs of treatment provided – especially rationalising the range of services available’.
“Perhaps the most disturbing example of the callous new approach however is the phrase used in the Morrison Low report to the ACC board which talks about the need to ‘significantly cut back to essential and core (services) – effectively draining the swamp,” Maryan Street says.
“So ACC staff are now being encouraged to view ACC clients as swamp-dwellers? It’s not only offensive, it’s a very disturbing example of the type of culture now pervading ACC.
“And what happens if staff fail to adopt the new ‘tough love’ approach (another phrase being used)? The reports make that clear. If they don’t turn down enough claim applications they will get the sack.
“One report says ‘there is a need for ACC to adopt more business/insurance-like behaviours…this may mean changes in the staffing and skills mix’ and ‘the introduction of stronger performance management mechanisms’.
“These reports raise serious questions about exactly what is going on at ACC and what staff are being directed to do. The public has a right to know how the ‘gateway’ is being tightened and exactly what services ACC staff are now being instructed to refuse to provide.”

http://www.labour.org.nz/news/acc-clients-renamed-%E2%80%98swamp-dwellers%E2%80%99-under-new-tough-love-approach