This idea was initially proposed by the Woodhouse Report (1967) which set out the principles and design of the ACC scheme. While Woodhouse thought it was too early at that stage to recommend that ACC cover both personal injury by accident and disability caused by illnesses, he did suggest that, later in the piece, the idea should be considered. After all, why discriminate? The fourth Labour Government even introduced legislation to do it in 1990, but they were removed from office before it could be implemented.
For the disability community, the disparity between ACC cover and public-health/social-welfare benefits has always been a cause of grievance and is seen as discriminatory. The Court of Appeal actually agreed that it is discriminatory, but found it to be 'justified' discrimination.
The present Minister for ACC, Judith Collins, has rejected the proposal, as she does not want ACC levies to rise. But let's look at some of the facts.
The tax-payer is already paying to support those with illnesses through public-health funds, primary-care subsidies and sickness and invalids benefits. So, there already is a cost right there. But, as ACC entitlements are more generous, the cost of caring for all illnesses under ACC could be more costly overall. As far as I know, though, no-one has done the maths to figure what the estimated costs would be.
According to the latest figures available, there were about 82,000 people on weekly compensation payments in ACC, while there were a total of about 143,000 on sickness and invalids benefits. Now, the proposal for ACC to cover illnesses does not mean that it would have to cover all of those 143,000 beneficiaries, as we have no idea yet what the exact criteria of ACC cover for illnesses should be. Would it cover congenital disability and chronic mental illnesses, for instance?
A recent study by Susan MacAllister at Otago University found that injured people covered by ACC are 3 times more likely to have returned to work after 12 months than a matched sample (including matching functional impairment) who suffered a stroke. ACC claimants' economic and social outcomes were much better.
Received economic wisdom would suggest that more generous income-replacement policies under ACC would mean longer times to return to work. But this study suggests quite the opposite.
So, we need to consider the possibility that transferring those incapacitated for work by illness to the more generous ACC benefits may actually mean a better return-to-work rate, because of the more generous support, rather than in spite of it. That is, ACC may be more cost-effective economically than MSD's means-tested benefits.
Another point: the employers' levies already cover illnesses that are caused by work-related factors, so the proposal to extend ACC to illnesses would have no effect on employers' levies! The impact would mainly be on the earners' account, which is the one that wage and salary earners pay into to cover off-the-job personal injury.
Many people argue that, if we cut the ACC's subsidies for minor injuries that require only one or two visits to the doctor and that cause no time off work, then there would be more funds available for the more serious incapacitating injuries. It's true that ACC accepts a huge number of medical-fees-only claims (about 1.4 million of them per year). But, they are not the major cost-driver of the scheme. Furthermore, if we were to say to the patient in the waiting room that they will get an ACC treatment-subsidy only if they need, let's say, at least one day off work, then that could put pressure on patients to seek more time off work, and on doctors to certify it. That would not necessarily be cost-effective. It may be better just to have ACC cover all injuries as they happen, without asking how on day one disabling they are, so that the injured person gets back to normal as quickly as possible. It may well be the case that many are returning to work straight away because they sought medical treatment immediately, and no further support was required.
More research is needed!