South Australia has pledged to increase competition in its local workers’ compensation scheme in the hope of improving (some say fixing) it. Most other Australian States have a competitive structure with private insurers. In a couple of years, those insurers will be battling it out to achieve national coverage as the Federal Government moves to harmonise the State systems.
New data from Canada shows that perhaps Australia needs to take a deep breath and nationalise workers’ compensation for the good of the injured workers and business.
“The public administration of workers’ compensation in the Canadian systems provides a strong economic benefit to employers, arising from the lower administrative costs of a single public agency compared with the costs arising in a competitive insurance market. There is very little evidence that competitive insurance markets are more efficient in the provision of health-care services or in providing wage replacement benefits to injured workers.”
One could argue that the research is a comparison between California and Canada, a State compared with a country, and that this is unfair. If it is taken as a comparison between a private system and a free-market model, the research has broader relevance.
The two systems have differences which are listed in the report but each system has very similar principles.
The dollar comparisons in the report are very telling with one of particular interest: administrative expenses per covered employee in Canada are $93. California’s are $478.
It seems that Australia needs to ask the hard question which is not one insurer or multiple insurers, but government-run or private.