Why have ACC costs risen?

[rok-the-boat]

No one seems to be asking this. Surely the cause of our problem lies here. Have ACC costs risen because more people are crashing, or are hospitals spending more money to fix the same amount of crash victims? Is there a fraud element? Why have costs risen? And surely, they must have risen otherwise we would not be in this predicament. Or, have motorcycles alway been subsidised by other groups?

A reply I got from my mass emailing to parliament from Nicky Wagner was :
"ACC paid more than $62 million to motorcycle riders but collected only $12.3 million in levies."
Has this always been the case or is it a recent phenomenon?

THOUGHT: Now if REGO costs do rise, I'll just ride on the road in the summer (3 months), as will many others, and chances are, we'll crash just as often - just a bit more 'intensely' as we will ride more often to get our money's worth, if you see what I mean - hell, I'd not rego the car for the same period and save more that way and just ride the bike. And, in other months, Ill remove my lights and ride off-road more - presto, more accidents, unfunded. Ho hum. Revenues could be down, and accidents - probably about the same. Ho hum.

[Mully]

This has been addressed - the short version is that ACC have changed their accounting methods. Where they once had "this year's levies must pay for this year's costs" they have switched to "this year's levies must cover all the costs for claims which start this year".

[NighthawkNZ]

http://www.thestandard.org.nz/first-manufacture-a-crisis/

[Hopeful Bastard]

No one seems to be asking this. Surely the cause of our problem lies here. Have ACC costs risen because more people are crashing, or are hospitals spending more money to fix the same amount of crash victims? Is there a fraud element? Why have costs risen? And surely, they must have risen otherwise we would not be in this predicament. Or, have motorcycles alway been subsidised by other groups?


I can answer that one... Its dickheads like yesterday that make them go up. All he was wearing was a full face helmet. Nice colourful T-shirt. Awesome longs. and work boots. Hooned off from the round about and passed a car which was obeying the speed limit. I guess his speed to be about 80 in a 50km zone...

[pzkpfw]

This has been addressed - the short version is that ACC have changed their accounting methods. Where they once had "this year's levies must pay for this year's costs" they have switched to "this year's levies must cover all the costs for claims which start this year".

...PLUS a portion of the costs of previous years claims which were not "fully funded" under the old system but now need to be.

i.e. "this years costs" now include a loading to cover the future costs of previous years accidents, that would have already been paid for in previous years - if the current system had been in play then.

It's confusing, but essentially we are the people paying to "catch up".

(Though hopefully the time that they make us "catch up" over will be extended; as that spreads this cost out.)

[rok-the-boat]

I still don't get it. Something is 'up' with the numbers.

[dpex]

[QUOTE=rok-the-boat;1129473839]No one seems to be asking this. Surely the cause of our problem lies here. Have ACC costs risen because more people are crashing, or are hospitals spending more money to fix the same amount of crash victims? Is there a fraud element? Why have costs risen? And surely, they must have risen otherwise we would not be in this predicament. Or, have motorcycles alway been subsidised by other groups?

A reply I got from my mass emailing to parliament from Nicky Wagner was :
[I]"ACC paid more than $62 million to motorcycle riders but collected only $12.3 million in levies."

What Wagner failed to mention was that the total ACC bill was $24 billion. That's 24-thousand-million.

Biker claims represent just 0.002%. It follows that 99.98% of total claims are not bikers. So why are we being separated out for a good thumping?
[

[davereid]

Its just an accounting thing, compounded by ACC making some bad investments.

In the old days, ACC charged the money they needed to meet claims as they occured.

So, if you crashed in 2009, levies reflected the cost of treatment you got in 2009.

If you were still getting ACC in 2010, that was charged to the 2010 levy account.

But that has all changed. Now ACC has to charge you, in 2009, all the money it COULD EVER have to pay out for you. Then it invests it, and apparently loses it.

So it has to charge you again in 2010 for every thing it lost in 2009, plus everything you might cost them in the future for the crashes you might have in 2010.

[rok-the-boat]

I posted this reply I got on another thread but it seems to fit here too. This is a good answer / reply / strategy.

Thank you (From Jim Anderton) for your message regarding the proposal to increase the ACC levy payable by owners of motor bikes, in some cases by several hundred per cent.

I am opposed to this for two principal reasons:

The first is that it is not necessary. The ACC fund is not in a financial crisis as the current National led government claims. The scheme as originally constituted was a ‘pay as you go’ scheme i.e. the levies received in any one year meet the requirements for payments in that year. In fact the recent history of the scheme has been that the income more than meets the payment requirements. The same applies to, for example, national superannuation. In that case the identification of the effect of the ‘baby boom’ generation coming to retirement and creating a demand ‘bulge’ on the commitment to pay universal pensions at a reasonable level can be anticipated and planned for ( the so-called ‘Cullen’ fund). If the ACC funding was in crisis this could be handled in the same way, but it is not in crisis and no amount of insisting that it is on the part of the present Minister can make it so.

The problem arises because the current government insists that all of the future financial obligations of the fund must be funded in the present. That would make sense if the ACC was an insurance scheme – which it is not and was never intended to be. It makes even more sense if the government has a hidden agenda – which looks increasingly likely – to privatise the ACC or farm parts of it out to insurance companies. In those circumstances, a fully funded scheme in which the fund has been paid for by taxpayers would look a very attractive proposition to a private insurer, but it is one to which I am entirely opposed.

The second reason is that the ACC scheme was never intended to be a user pays scheme in which those who allegedly incur specific costs must, as a group, also meet those costs in full. The scheme is intended to draw upon the overall resources of the community to ensure that those who suffer an accident do not find themselves disadvantaged because they cannot afford treatment or rehabilitation, or meet the expenses associated with a lengthy court case. I note that Sir Owen Woodhouse, whose report led to the setting up of the scheme in 1973 has very recently said precisely that. Saying that motor cyclists must pay much more than presently because they are ‘responsible’ for their accidents not only breaches the principal behind the scheme, it also re-introduces the notion of fault into the scheme when it was set up in the first place to avoid it.

Please be assured that I will be opposing the proposed increased levy and that we in the Progressive Party are committed to restoring the scheme to its original basis when we return to government.

Warm regards,

Jim Anderton
MP for Wigram
Progressive Party Leader