The rocky road to a national disability insurance scheme

If health and water reform are anything to go by, COAG is in for a challenge.

The stakes are high for today’s Council of Australian Government (COAG) meeting in Canberra, as it decides how to respond to the Productivity Commission’s report into disability care and support in Australia.

The report recommends establishing two new insurance schemes:

1) A federally-funded National Disability Insurance Scheme (NDIS) to support all Australians with significant and permanent disability.

2) A separate state- and territory-funded and operated National Injury Insurance Scheme (NIIS) to provide coverage for new cases of severe accidental injury.

The commission’s report, released last week, addresses many of the problems of current systems.

But what will these schemes mean for the estimated 440,000 Australians set to receive funding from the schemes?

And what impact will they have on the states and territories?

A new approach

The NDIS will fill a space that’s currently highly fragmented and where disability services are provided by a multitude of state initiatives, not-for-profit providers, families and carers.

While not exactly a blank canvas, the current system is sufficiently broken to warrant an entirely new approach.

The NDIS is largely a needs-based insurance scheme that is available to all Australians regardless of the cause or duration of their disability.

This means that eligibility for the scheme is based on level of disability and it will be available to people with existing disability as well as those with newly-acquired disability.

The report estimates that 410,000 Australians would receive direct funding from the scheme.

It would provide long-term financial support for services such as home and vehicle modifications, personal care, respite, community access support, domestic and transport assistance.

If adopted as proposed, the commission’s recommendations would go a long way to removing current inequities and would provide the foundation for substantially improved quality of life for hundreds of thousands of disabled Australians, their carers and families.

An old approach?

The commission proposes a very different approach to compensation for catastrophic injury – albeit in a space where well-established, state-based approaches are already at play. This is the so-called “federated model” for the NIIS.

The injury scheme will be a “cause-based” insurance scheme that is available to Australians with a new “catastrophic” injury, usually severe traumatic brain injury, spinal cord injury, severe burns or multiple amputations.

This means that eligibility is limited to people with recently acquired disability resulting from accidental injury. The report estimates that 30,000 Australians would be in the scheme in the long run.

The NIIS is a series of state- and territory-funded schemes with nationally consistent principals.

The scheme would provide acute care, rehabilitation and lifetime care and support services such as those already provided in Victoria and New South Wales for injury resulting from transport accidents.

The scheme would be “no-fault” and would be extended to include injury arising from medical accidents, criminal injury, and injury occurring at home or in the community.

People with existing injury-related disability, and those with new injury-related disability who do not meet the criteria for “catastrophic injury”, would continue to rely on the current state-based injury compensation schemes.

These systems provide highly variable levels of coverage and support and exclude some individuals from receiving compensation based on fault.

Intriguingly, the commission suggests that the federated model is a third-best option for the NDIS, yet recommends this model for the NIIS.

The injury scheme is certainly not as ambitious as the larger disability scheme.

Making it happen

Implementing the commission’s recommendations will require national and state cooperation of a kind rarely seen in this country.

Recent COAG discussions on health system and water reform give an indication of the potentially rocky path ahead.

The commission describes a clear implementation plan for both the NDIS and NIIS with a long-term horizon. If all goes to plan, the NDIS will be progressively rolled out from 2014 and would be fully functional in 2018-19.

A faster rollout for the NIIS is proposed, beginning in 2013 and complete by 2015.

It’s clear that some states will be more affected than others by the new proposals, particularly with the NIIS.

For example, both Victoria and New South Wales already operate no-fault catastrophic injury compensation schemes for injury resulting from motor vehicle and work accidents, major causes of such injury.

Extension of these schemes to other causes of catastrophic injury will have a financial impact but will be relatively straightforward.

Most other states operate common law or fault-based injury compensation schemes with limited benefits for injured persons.

In those states, the economic impact will be more significant and the rollout will be much more difficult, requiring substantial changes to current systems.

This may be one factor contributing to recent political opposition to the Productivity Commission proposal from Western Australia.

The likely result?

The Productivity Commission should be congratulated for proposing such a bold social reform in a time of relative economic and political instability.

The proposal does not solve all existing problems, particularly in the area of injury insurance, but it is a very large step in the right direction.

If implemented, the disability and injury insurance schemes will positively impact the lives of hundreds of thousands of disabled Australians.

But first, the Commonwealth, states and territories need to agree on a plan.