Editorial: Govt medicine welcome cure for ACC ills

Stridency and overstatement have been hallmarks of the debate leading up to yesterday's announcement of planned cuts to ACC entitlements.

The Government, keen to impose cost controls, has sought to portray the compensation scheme as being on the point of collapse.

Its opponents say any change would be a prelude to privatisation. Yet all this exaggeration could not disguise the fact that ACC needed to be reined in.

A certain laxity has pervaded its activities over the past few years, triggered perhaps by both the previous Government's approach and a desire to keep its name off the front page.

This has resulted in a ballooning of costs and, now, as a consequence, the need for fairly strong medicine.

Several questionable notions are behind the Government's doom-laden prognosis of ACC's future costs. Little heed is paid to the fact that the corporation's investment returns are bound to improve over the next few years.

Nor is account taken of the beneficial impact of inevitably increasing interest rates on the net present value of ACC liabilities.

There is also no acknowledgment of the benefit of pushing back the date when ACC passes from being a pay-as-you-go scheme to a fully funded one from 2014 to 2019, even though this move was confirmed yesterday.

Notwithstanding all this, change is required. Over the past few years, a number of worrying trends have caused the ACC's liability to blow out.

Wider entitlements, partly the result of court rulings and partly prompted by the Clark Government's wish to expand the coverage and increase the take-up rate, has resulted in the number of claims rising by 4 per cent a year, much faster than the population growth of 1 per cent.

Added to this has been a gradual increase in the average time on ACC and rising medical costs. This prompted the corporation's alarming set of proposed levy increases, which the Government, understandably, saw as politically untenable.

Much of the focus of the alternative - reducing those increases by tightening and limiting entitlements - has been on the extended cover initiated in recent years.

Already announced was an end to free physiotherapy visits, which were introduced in 2004. A $10 to $20 cost for each visit should control what had become a disproportionately large claim on the scheme.

Similarly, the Government is reversing 2008 income-compensation extensions covering casual and part-time workers. Also scheduled to go are entitlements to the families of people who commit suicide. This has always appeared a strange aspect of a scheme designed to cover accidents.

The Government will also find little resistance to its decision to further restrict entitlements for criminals. Income compensation and lump-sum payouts will be barred to those who injure themselves in a crime that results in a prison sentence of at least two years.

ACC's principle of "no-fault" coverage will be maintained by the corporation paying for the treatment of such people, but there will no longer be the spectacle of considerable sums being given to someone injured, for example, in a P-lab explosion.

In halving the ACC's proposed levy rises, the Government has addressed a few further oddities. Large motorcycles will attract a far bigger licensing levy, which reflects their likelihood of involvement in an accident and removes the subsidisation of their ACC bills by car owners.

Also welcome is consideration of no-claims bonuses, experience rates and lower levies for those with safer vehicles. The amount paid should, as far as possible, echo the chance of an ACC claim.

If so, safer roads are the logical outcome. And a change there would be as welcome as stricter control of ACC costs.