Minister for ACC Matt Doocey is launching a review into the state injury insurer over concerns around increasing costs and declining rehabilitation rates as the scheme's levies increase.
Doocey announced on Thursday the Accident Compensation Corporation’s earners and business levy will be increased by up to 5% annually for three years to meet the rising costs of the scheme, starting from mid-2025.
“ACC provides critical support to New Zealanders in times of need, but I am concerned that ACC’s performance has been declining for a decade. Rehabilitation rates are down, weekly compensation costs are up and average costs per claim are up,” he said.
For somebody on the median full-time wage of about $70,000 a year, this means the ACC levy increase will add an additional 80 cents per week, or $42 for the 25/26 financial year. By the end of the three-year period, it’ll be a $140 increase to the annual levy.
The current yearly ACC levy amount someone on a $70,000 salary per year pays is $973. Next year it’ll be $1,015. More examples of what the increased levy rate will look like for people on lower and higher salaries can be found here.
Motor vehicle levies are also being raised 5% for vehicle owners and will have an “inflation adjustment” per year for three years, Doocey said.
In the current 2024/2025 year, the motor vehicle levy rate is $42.09. It will go up to $49.38 next year. In three year’s time the annual levy rate will be up to $64.26.
Owners of electric cars (EVs) are seeing a much larger levy increase in comparison, with the levies on EV owners set to jump over 159% next year.
The levy rate for EV owners for the 2024/2025 year is $42.09. Next year, the levy rate will go up to $109.05. In three year’s time, the annual levy for EV owners will be $122.24.
ACC Chief Executive Megan Main said the levies and funding of the ACC scheme haven’t kept pace with the increases in compensation that injured people are receiving from ACC.
The scheme spends around $2 billion more than it collects each year, and the Crown entity spends $7 billion on health care and weekly compensation to support the two million injury claims the no-fault scheme receives each year.
“The decision by Cabinet to increase levies will go some way to alleviating the pressure and ensuring the scheme is sustainable for future generations. However, improving rehabilitation performance is a priority for ACC,” she said.
“We support the Government’s review to ensure what we are doing will help injured people get better faster.”
The review into ACC will have a “particular focus” on claims management, according to Doocey.
“It will look at whether ACC has the right interventions and settings in place to support accident claimants to return to independence as quickly as possible,” he said.
“Alongside the review, I am working with the ACC Board and the Ministry of Business Innovation and Employment to strengthen performance monitoring and achieve more targeted and cost-effective social rehabilitation services.”
The state insurer revealed a $7.23 billion deficit in the June-2024 financial year, driven by a 16% increase in injury services and compensation. ACC said the deficit had “exceeded” its budget expectations.
During the June-year, two million injured people were paid out over $4 billion for treatment and rehabilitation services, and almost $3 billion of compensation payments.
72 Comments
These lot are just as bad as the previous.
How about we means test the $30billion in welfare we are giving to over 65's in this country. They are literally sucking us dry.
No wonder 55,000 kiwis got up and left in the last year. Ordinary middle class workers have no future in this country. It's road user charge increase here, ACC there, council rates over there. Deferred spending by the most entilted generation who have now pulled the ladder up behind them and want the next generations to pay for their cushy retirement. Incredible.
Good rant there stjohn but let's get back onto the topic of ACC costs blowing out. That generation you hate on never got an expensive helicopter ride with paramedics and modern drugs after an accident. It was a suck on nitrous and a bouncy ride in the meat wagon driven mostly by volunteers.
They do now. I can't find data on ACC claims by age, but the injury stats show that more than half of injuries are suffered by people who are 60+, and growing fast.
https://explore.data.stats.govt.nz/vis?tm=injury&pg=0&snb=26&df[ds]=ds-…
I suspect that translates to the majority of ACC spending being on the elderly, but I'd love to be able to find those stats.
I doubt that the over 60s account for much of ACC spending. The biggest costs to ACC are the earnings-related compensation, as opposed to ambulance rides and rehabilitation costs. Therefore, if you are retired the costs to ACC will generally not be too much. If, however, you are are middle-aged professional on $100K+ / annum and suffer an injury that prevents you from working, the earnings-related compensation costs dwarf any medical expenses within a couple of months.
The country has been doing "expensive" helicopter rides since the 1950s.
See the chart (Figure 2 - Age distribution by medical or accident related transport) on page 29 for age distribution in the following 2018 Christchurch Air Retrieval Services report:
However, the number of CARS’ transports of children under one year of age was still notably high, and they represent the fifth highest individual age group, only exceeded by ages 65, 66, 68 and 70.
https://www.otago.ac.nz/__data/assets/pdf_file/0021/330852/louise-jacob…
Waiheke Island makes up third of Auckland Rescue Helicopter Trust missions
Rescues to the island were more likely to be for medical emergencies rather than accidents, and the patients were generally several years older than the average rescue patient age - 54.
https://www.nzherald.co.nz/nz/waiheke-island-makes-up-third-of-auckland…
You do realize that ACC don't pay for medical flights, only accidents.
The point I was making is that the ACC cost for the lifetime of a boomer will be less than someone of the following generations. Medicine can do so much more now, but it comes at a cost.
I dare say the non-accident related medical costs will also burden the taxpayer more for the same reason plus because of the increasing obesity of young people today.
Helicopters aside, see below. Check out the chart "New Claims for Injuries at home, by Age". In 2023 there were 330k+ new claims by over 60's, which is 34% of injury at home claims.
https://www.acc.co.nz/newsroom/media-resources/home-and-community-injur…
Vs 195k new claims in workplaces.
https://www.acc.co.nz/newsroom/media-resources/work-injury-statistics/
There's been some precedent setting decisions in the last 2 years opening them up to an unknown future cost such as mental injuries caused by Injuries overseas. This case also, the implementation of Maternal Birth Injuries into the legislation, etc. Add din the increase in surgeries with ageing population having injuries (higher likelihood of needing surgery). The main issue being they have to stash the money away for the predicted lifetime cost of all claims, so when one is approved, there's an immediate requirement to put away the lifetime cost, and hence when more get approved due to case law and the likes of the increase in prevalence of mental injuries caused by physical injuries, the cost is amplified by the amount required to stash. Hence, higher claims, higher costs to all and if the money isn't there, then levies need to increase. I guess we also got a decent drop in Rego around 10 years back when the safety ratings came in too, so I;d guess that will tick back up over the coming years.
Here are the numbers on obesity. Peaks at ages 45 - 54 and 55 to 64.
Actually conditions that affect obesity occur more for those middle aged and elderly including massive changes in metabolism. Hence the greater rates of obesity during those periods. Add to that the medication provided to many that rapidly increase weight gain that are discouraged in being prescribed to youth. So obesity hits far more of the population in middle age & early retirement (also see many types of birth control, antidepressants, thyroid, autoimmune, hormone imbalance, organ cysts & organ failing diseases etc). Obesity while is more likely to affect women medically can also be a factor for men with these conditions as well. Ascites also have very poor treatment management in NZ.
To answer both yourself and NZdan, of course people gain weight and have more medical costs as they get older. But the thread started by stjohn was hating on the boomer generation as having taken more than their share. In the context of ACC and medical that's bullshit. You can't deny later generations are costing comparatively more during their lifetimes due to advances in medical care and being more overweight and less active at every age bracket.
This is normally true, but the article clearly states they are spending more and getting worse outcomes. The data provided by other commentators backs up my points that over 65 are a money drain, and in a financial context like we are discussing on interest.co this is a valid argument from me.
Can't have your cake and eat it. If the over 65 are a negative loss in ACC, they need to provide more coin for the coffers. And don't say their taxes they paid 30 years ago were meant to fund this, we both know that not how it works.
While the rehabilitation outcomes are declining, I very much doubt that you can blame the boomers for that, more likely societal changes and ACC's abysmal performance over the last 20 years or so. We are talking about an organisation that gets a 55% (approx.) approval rating from healthcare providers.
The biggest costs to ACC are the earnings-related compensation, as opposed to ambulance rides and rehabilitation costs. Therefore, if you are retired the costs to ACC will generally not be too much. If, however, you are are middle-aged professional on $100K+ / annum and suffer an injury that prevents you from working, the earnings-related compensation costs dwarf any medical expenses within a couple of months.
You've not provided a single piece of data to support your claims though. It's just emotionally charged reckons as you jump to the defense of boomers, twisting and turning as data is put forward.
Boomers are a mammoth drain on the taxpayer. We understand it's not something you like to hear, but the facts aren't too worried about your feelings.
Which emotionally charged claim do you need data to believe in....that advances in medical care in the last 30 years costs more, or that people of all ages are getting fatter and less active?
Yes of course over 65s are a drain on the taxpayer. What do you suggest is the answer to that..(apart from your frequent suggestion that the useless old codger on the pension thats been holding up your career advancement be sacked)?
My career advancement has been very good. One can make an observation without having been personally impacted by it, but nice try.
That said, the original comment in this chain was around our highly indiscriminate welfare we give out to old people in this country to the tune of $20b+ p.a. Nobody is suggesting we take away this welfare to those who genuinely need it, nor that we sack old people cruising along dragging down productivity, but that we just be prudent with taxpayer money that is seemingly in short supply at the moment.
stjohn,
I have no doubt that means testing the pension is inevitable. In 2021, a Treasury paper forecast that NZS costs would rise from 5% of GDP to 7.70% by 2061, while healthcare spending would rise over the same period from 6.90% to 10.60%..Unless we can somehow become much more productive, then this is unaffordable
RUC is set to be comparable to the fuel levy that a petrol vehicle uses at about 10L/100km. The ACC levy on petrol is separate to the fuel levy.
The comparable petrol car to most EVs would be using about 5L/100km - but RUC covers all the diesel SUV and UTEs with their excessive fuel consumption
This doesn't make sense to me:
The state insurer revealed a $7.23 billion deficit in the June-2024 financial year, driven by a 16% increase in injury services and compensation. ACC said the deficit had “exceeded” its budget expectations.
During the June-year, two million injured people were paid out over $4 billion for treatment and rehabilitation services, and almost $3 billion of compensation payments.
Both sentences add up to $7 billion. So how can you have a $7 billion deficit as a result of paying out $7 billion in claims/treatment?
It's flawed journalism and reporting of the issue.
The extra $7B is an addition to the Outstanding Claims Liability, ie the estimated life time cost. It's an accounting practice to bring this expected liability into the financial statements.
It could just as easily be reversed over time as well.
ACC explain it in the annual report. It's bad form on the part of the politicians and journalists not to look deeper, so as to explain it better to the uninformed public.
By not doing so they've simply created extra angst amongst the citizens.
You're missing the point. It's the faulty communication by the pollies and journos, not being capable of explaining the real causes to the average citizen, so that they can see and understand.
How is it any different from any other business justifying their cost increases?
There was no cost blow out in the current year.
...increasing costs and declining rehabilitation rates...
Why? With better technology and medicines the cost per capita of healthcare should actually be falling on an age adjusted basis while rehabilitation rates should be increasing. We can't just keep throwing money at poorly performing services.
It depends on the nature of the injury and the impact on one's earnings. They might not be capable of returning to the higher paid work.
$10M paid out on 1700 vaccine injuries as at July '24.
There's also recently added court rulings regarding treatment for abuse victims. $3B.
At what point does our constructed system begin to value human well-being more than $$?
Sustainability has nothing to do with the increased costs. What's the solution - a US based healthcare system? We don't know how good we've got it with our ACC system.
Again, we're not given enough information to discuss the issue, or the real causes. Instead everyone's bitching about boomers and obesity, RUC's and registration. Nunya obviously care about the people in need of accident and emergency care.
You want to reduce costs, then remove all the causes - vehicles, sports, labour intensive work (which would just be classed as degenerative), dangerous objects and machinery, hard floors, shitty foods, toxic chemicals etc etc. May as well remove humans because humanity has already gone judging by many comments.
If you look closely none of it's sustainable - insurance, energy demand, health costs, wage growth, retirement, finance, tax revenue, govt spending, consumer spending, economic growth - under the current model. It's all permitted by financial asset inflation, including credit creation, which isn't sustainable either.
Everything is an increase in cost to the end user.
And ya wanna know the real cause? Everyone fixated, consumed by the value of tokens, that we don't know the true value of anything.
Sounds like everyone would be happy to sell their parents, brothers, sisters, and children, if they could get more for themselves.
And Jesus wept.
ACC pays legal services a lot to fight claims (they pay lawyers far more then the cost for the entire claim cover more then twice over). If a claim goes to review they pay even more and pay for multiple false specialists to try to brush off recognised physical injuries by multiple specialist clinicians as depression (e.g. in cases of severe brain injury where a person loses physical abilities in movement, reading, sight & memory retention) or degeneration (e.g. for severe physical joint or sensory injuries like nerve damage from chemical burns on the hands and them being crushed). With a failing health service ancillary medical services to aid recovery are not available so recovery becomes a longer and more complex issue as instead of immediate treatment, treatment delays can lead to increased damage, infections, more injuries etc.
So it is not that there are poorly performing services hired by ACC not working per se it is that we have more complex cases of injuries that are not being treated and ACC is throwing tons more money into legal services to avoid payments.
In new cases of rape or sexual assault where both physical and MH is affected the treatment pathway for MH may be limited but we don't have good or much of any medical service access to support recovery in physical effects.
I know as well many more medical misadventure cases are also coming through because our failing general public hospitals are harming people greatly, perhaps not intentionally, but the quality of our health services has dropped with the poor staffing. One guy even had his bowels sewn up in a loop by accident which they failed to fix over 10 surgeries and years for which ACC had to cover home services as well because he could not perform normal tasks and was in great pain. ACC also spent heaps on legal in this case to deny all wage cover and deny the support needed to fully cover his home needs. There are far too many more medical misadventure cases and just think we added mismanagement when it comes to women as well more recently. So a practitioner that inserts a device that cuts internal organs and causes sepsis can continue doing it to other women without any responsibility except an occasional sorry if pushed. But now ACC needs to cover the surgery to remove the device, aid recovery and if permanent disablement occurs provide long term support (often prior women would just get brushed off and many would die or have to make do without support or income during those periods).
It's not the treatment that costs money, it's the earning-related compensation. ACC funding of treatment providers has failed to match changes in CPI of median wage growth for 20 years. Specifically, from 2007 to 2024 the CPI increased by 53%. Across the same period hourly wages in NZ increased by 77%. However, ACC payments to providers were increased by just 26%.
That's all very well but they happily turn around and say it's degenerative when that is not the case (according to the surgeon) but their "speciallist" says it is and there is no arguing against their specialist who is only a specialist in getting out of paying, probably a big back-hander going on.
ACC is a scam outfit. Take your money but if you injure yourself they say it's degenerative. Such a bunch of rip offs. Worst organization in NZ. I have to pay 50k for my partners surgery as ACC first accepted then declined. (Up to 3 year wait in the public system) ACC are the worst bunch of people with nill empathy.
I'm sorry to hear you've had that experience. It's a standard MO of insurance companies to find any means possible not to payout.
I guess I'm one of the lucky ones. Some serious and not so serious injuries, and no real hassles with the ACC service, or health system for these incidents.
I've also had years of legal battles with an insurance company over other health related claims.
If you dig though many pages of the ACC annual report, you eventually find this little gem:
"Health provider satisfaction declined to 55% and is the lowest result recorded to date. Low results continue to be driven by the satisfaction of general practitioners and physiotherapists who need to interact with ACC more regularly than other provider cohorts"
ACC8695-Annual-Report-2024.pdf
Interestingly, this particular item never made it into any press releases. Remember, it is not ACC that fixes people up, it is the (generally hard-working) health workers, about half of whom think that ACC is doing a rubbish job. I am glad to see that an inquiry into ACC's performance has been announced yesterday.
And the inquiry is going to come from the wrong angle. When it's all about cost savings, can it address the cost model of the frontline providers?
Does the recent report into abuse in state care add extra claims to ACC?
Depending on the nature of the injury/accident, the inner capability of the person, there could be many PTSD type issues. These do take longer to rehabilitate and forcing the issue may make it worse. The current health model isn't up to date with effective trauma treatment. It may require a whole different set of resources which are going to cost.
If it's about a minority gaming the system, then this is the wrong end of the problem, when the majority are gaming the system any way they can. It's an accepted norm, but oh no, when someone else does it by different means.
Big employers can opt out of it, although they still have to provide workers cover through a private scheme.
For all its faults, the ACC scheme works very well about 90% of the time. The efficiencies gained by having just one system outweigh most of the negatives.
Most of the dissatisfaction is with the levels of funding, which makes cost a barrier to treatment for many people, especially those on lower incomes. The other problem is ACC's tendency to deny cover to anyone over the age of 30 with even a hint of age-related changes.
https://www.acc.co.nz/for-business/understanding-levies-if-you-work-or-…
Everyone who works or owns a business in New Zealand pays levies. These levies cover injuries that happen at work, at home, on the sports field, and when you’re out and about.
https://en.wikipedia.org/wiki/Accident_Compensation_Corporation
Accredited Employers' Programme
ACC allows certain companies to manage and fund the claims of its employees who are injured at work. In return, they are given a large discount in ACC premium. ACC says this provides companies with a financial incentive to have good health and safety practices at work.[32] More than 140 New Zealand employers participate in this programme. ACC Futures Coalition and Green Party criticize this programme because creates a conflict interest for employers to wrongly deny claims and say it should be cancelled.[33]
Maybe this is some catch-up after years of underfunding? Over an extended period, ACC has reduced payments in real terms to front-line treatment providers. Specifically, from 2007 to 2024 the CPI increased by 53%. Across the same period hourly wages in NZ increased by 77%. However, COTR payments were only increased by just 26%. When the public system acknowledged the historic and ongoing underpayment of nurses, physios etc. with a 20% pay increase, ACC increased it's funding by something like 5%.
This goes some way to explaining why ACC's approval rating among frontline health workers is 55%.
Never had issues with their service personally, but nor did I have to deal with them directly.
It is the business model not just theirs. Big business especially. There is no customer service or quality from these institutions anymore. That's what happens when humanity focuses more and more on money over humans.
I believe they used to fully fund physio for a couple of years around then (I remember for my own injury around 2009-2010) See here. No doubt this got abolished from too many providers taking the piss with public money and getting people in far more often than was necessary as they were on the govt funding tap.
Yes, they did "fully" fund physio for a few years. We found that:
1: people did not value the service / advice they were getting and so were less inclined to follow instructions. The impression is that when an individual pays for a service, they have more sense of ownership and value the outcome.
2: It became hard to discharge patients. They wanted to come back until they were rehabilitated beyond what we would normally do. If you get people 90% there, time and nature tends to sort out the rest.
Overall, the proportion of providers "taking the piss with public money" is very small. Yes, it does happen sometimes as I'm sure is the case in many industries. The idea of it being "fully" funded is a misnomer. A report published in 2007 recommended that the funding to physios be increase by about 30% (ACC must increase physios' payments, says report - NZ Herald), which has still not happened.
How about applying levies to sports organisations?
It's currently a zero-levy free ride, but sports injuries make up about 25% of ACC claims, and (I think) an even higher proportion of serious injury claims.
If anyone can find better data than what I can dig out of the ACC site for 2018 or so, I'd be interested to see it, as it's the hugely costly elephant in the room.
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