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Originally Posted by fidgit
I would appreciate further clarification from you.
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Broadly the problem comes down to the change in behaviour of claimants that arises when they see a benefits as being free; and they measure "free" as meaning they don't pay at the time of receiving treatment.
What happens is that utilisation increases far more than the corresponding improvement in health in the population. This happens because too many people seek treatment they simply don't need. Normally, it takes several quarters for this type of problem to ramp up. Which, is exactly what has happened here. The end-game is that significantly higher premiums are needed for everyone, in return for which most people don't get anything.
On the flip side, utilisation by people who need care to be free (the very poor) doesn't necessarily imporve significantly. In the worst of cases, people can't afford to get to the treatment provider, and so the fact they can't afford the treatment anyway isn't really the issue.
Even tiny part-charges e.g. $5 are enough to help the people who are a problem to realise that the treatment isn't free. And, such modest part-charges don't really put off those poor that would have gone if the treatment was free.
Perhaps an analogy is the need to charge a tiny amount for plastic bags. If they're free, lots of people want them. If they cost 10 cents then lots of people won't buy them, yet they get their gorceries home perfectly well - so they've not missed out on anything. And, anyone who can make it to the store can surely afford 10 cents for a bag if they really need it.
I've seen this type of thing happen in the work I've done, both when ACC was open to competition, and in other lines of insurance. Also, this type of scenario really is covered in text books - it falls into the "really bad ideas" parts of the book.
ACC is in a particulalry awkard position. They have staff (obviously) that fully understand the implications of doing things like this. Unfortuantely, they have to pander to politicians who need to worry about their image. And, "free physio" is going to be a vote winner.
EVIL labor, and Saintly National are both telling blatant porkies about ACC at the moment. Really, it's a bit tiresome.