Call for sickness cover in A.C.C. scheme

Press, 13 May 1988, Page 9

Call for sickness cover in A.C.C. scheme

By

OLIVER RIDDELL,

in Wellington

Expanding cover under the Accident Compensation scheme to include sickness as well as injury, as soon as possible, is the main recommendation from the Law Commission’s review of the scheme.

The review has given overwhelming support to the scheme but recommends some changes to it. The report — “Personal Injury: Prevention and Recovery” — is the result of an inquiry by the Law Commission launched against a background of criticism of large and unexpected increases in the costs of the scheme.

There had been claims that economic efficiency required big reductions in benefits, and calls for a return to private insurance. There had been complaints of "rapid cost escalation” and a “huge costs blow-out.” The commission described these claims as misleading and rejected them. Widespread public support for the scheme was found by the commission and this was welcomed by the Deputy Prime Minister, Mr Palmer. But the report did recommend changes to benefits and funding. These were:— ' ® Funding: The present scheme was supported by levies on earnings, levies on motor vehicle owners, and general taxation. Under the new pro-

posals, all employers and the self-employed would pay levies on the same basis, probably $2.50 for every $lOO of payroll or earnings. The flat rate would replace the present varying industry classification which ranged from $1.30 to $18.70 per $lOO. The commission said the present varying classifications were unfair and

lacked any logical basis. This new flat levy ought to be fixed by Parliament and should not have to be changed for some time. At least 14 per cent of funds should continue to come from taxation, the commission said, and an appropriate part of the' excise duty on petrol should also be paid into the scheme. • Benefits: Four main changes to benefits were proposed: First — health services for everyone, whether incapacitated by illness or injury, should be equated as far as possible. Second — there would be periodic benefits payable until the age of 65 years (with provision for those injured after the age of 60 years) for any

significant permanent partial disability, designed to provide in a composite way for lost physical as well as economic capacity. Similar provision would be available to victims of sexual or other criminal attack who suffered significant or lasting mental distress or impairment. Third — the lump sum payments for permanent impairment of bodily

function and for pain and suffering resulted in delayed assessments, were modest in size and barred the way to extending the scheme to illness. Lump sums should be abolished. Fourth — the waiting period before earnings-re-lated compensation payments were made should be extended from one week to two weeks. If the injury occurred at work the employer would pay

the benefit for the second as well as the first week.

• Entitlement: Dismantling the distinctions between the sick and the injured should be done as soon as possible and could be done in stages without big costs. As a first step, the commission said all health benefits for sick and injured alike should be levelled — a step that could be taken quite soon.

The commission said its proposals on individual responsibility and incentive meant that, in general, those who were injured should wait a week longer before getting earnings-related compensation. They should also

meet a fair proportion of medical and related costs.

In those ways, greater emphasis would also be given to serious injuries. The periodic benefit for those with serious impairment would also do that.

The badly incapacitated would continue to receive payments to meet their needs, the commission said. Those payments would meet the serious needs better than did the lump sums payable now.