Academic journal article Agenda: A Journal of Policy Analysis and Reform

Evidence-Free Policy: The Case of the National Injury Insurance Scheme

Academic journal article Agenda: A Journal of Policy Analysis and Reform

Evidence-Free Policy: The Case of the National Injury Insurance Scheme

Article excerpt

Abstract

The Productivity Commission report 'Disability Care and Support' recommends tort liability be replaced by a compulsory, government-run, no-fault scheme. But theory and evidence indicate moving to a no-fault scheme will increase the accident rate. Even a move from non-risk-rated third-party insurance to non-risk-rated first-party insurance reduces incentives for care. A no-fault scheme is not superior to current policies; genuine reform will need to be informed by law and economics literature.

Introduction

In its 2011 'Disability Care and Support' report, the Productivity Commission (PC) concludes that the current State-based disability support system is 'underfunded, unfair, fragmented and inefficient' (PC 201 la: 2). It recommended replacing the State-based schemes with a National Disability Insurance Scheme (NDIS). Both political parties supported legislation to establish the scheme and a 0.5 percentage point increase in the Medicare levy to help fund it.

With all attention focused on multi-billion-dollar increases in spending on disability support, far less scrutiny was afforded the other recommendation in the Productivity Commission's report:

State and territory governments should create insurance schemes that would provide fully-funded care and support for all catastrophic injuries on a no-fault basis, and that would collectively constitute a National Injury Insurance Scheme (NIIS).

The NIIS would include all medical treatment, rehabilitation, home and vehicle modifications and care costs, and cover catastrophic injuries from motor vehicle, medical (excluding cases of cerebral palsy associated with pregnancy or birth, which would be covered by the NDIS), crimina and general accidents. Common law rights to sue for long-term care and support should be removed, though access to damages for pecuniary and economic loss, and general damages would remain. (PC 2011b: 88, Recommendation 18.1)

The Productivity Commission recommended that all states create no-fault motor accident insurance schemes by 2013, other forms of catastrophic injury be covered by 2015, and an inquiry be held in 2020 to examine widening coverage to damage for pecuniary and economic and to some non-catastrophic injuries (PC 2011b: 90, Recommendations 18.6, 18.7).

The PC estimates the NHS would have cost an extra $830 million a year in 2011- to be raised from increasing compulsory third-party insurance premiums for motor vehicles, medical indemnity premiums, surcharges on rail passengers, levies on boats, increased municipal rates and from general revenue (PC 2010b: 907, 913).

The National Injury Insurance Scheme: A 'no evidence' based policy

For a policy initiative to be worthy of the name 'reform' we must have some confidence, based on established theory or evidence, that it is likely to yield a net benefit to the community over time (Banks 2012: 107).2

There are over 20 000 people with a 'catastrophic-level' injury in Australia, with up to a thousand being injured each year. Around half of all catastrophic injuries are the result of motor vehicle accidents, eight per cent are work related, 11 per cent arise from medical incidents, with the remaining 32 per cent are classed as general injuries, typically associated with sport and recreation activities, criminal assault and catastrophic falls (PC 2011b: 793).

Currently the Northern Territory, NSW, Victoria and Tasmania have no-fault insurance schemes for motor vehicle accidents, the other states have fault-based tort law liability, where an accident victim can only claim from a negligent injurer, who usually carries compulsory third-party insurance (PC 2011b: 790). The PC's NIIS proposal involves major changes for all. Except for the Northern Territory (which abolished common law rights to sue for transport accidents), the current no-fault schemes are 'add-ons', with limited no-fault benefits. They preserve the right to sue for damages under tort law and apply only to motor vehicle accidents. …

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