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TABLE Z.-Percent of SMI enrollees meeting the deductible, allocates 37 percent of central government spend- by age and sex, July 1966-December 1970, a of January 1973 ing to and social insurance. [Estimated from bpercent sample of SMI enrollees] The Compensation Act of 1972- effective April 1, 1974-provides for two interre- Age and sex 1D~~l;,&~ 1967 ( IQ66 j 1969 1 1970 lated, no-fault accident compensation programs : ---_c- Total ______16.8 35.1 37.6 40.6 42.2 (a) and 24-hour accident -- -- 67-6365-66----_---___---_-______-_-----___ 13.0 25.3 27.2 29.6 31.1 coverage for the entire labor force, financed by ___ 15.4 32.7 w-70... - ______15.7 34.1 38.0 :t: contributions from employers and the self- 71-72-m.______16.5 35.1 39.7 43:4 75-7973-74.-.__-_ _- -_ _- -- -_ __ -______17.4 36.8 44152.: 44.3 employed ; and (b) complete motor-vehicle acci- 80-34.______-----______18.619.8 “4”o.t 46.2 85 and over 42:0 43.6 46.3 47.7 dent coverage for the etitiie population financed ______20.7 46.0 47.7 49.0 by vehicle drivers ,and owners.’ Men ______16.3 ------33.4 35.6 -- 38.6 40.2 An agency under the Ministry of Social Secu- 6568______24.0 26.0 67-68-.-- _- _-- - - - _- __ _ _ 31.1 2: rity-the Accident Compensation Commission- 68-70______15:o:z 32.4 2: 71-72______16 0 33.6 36:l E is to supervise the two programs. The new ar- 73-74-___- _ - - ___ _ - __ _ __ 16.9 35.1 36.9 42:l 75-79--_- -- _-- - - - ______18.2 39.6 rangements replace complicated mechanisms for m-84. ______- - - _- ______19.8 E 42.2 :t: 85 and over ______20.3 42:0 44.4 47.8 4s:7 dealing with compensation for industrial acci- -~. -- Women-. ______17.3 36.3 30.0 41.0 43.7 dents and for highway injuries where negligence --. 65-66-v______-______- 13.3 26.3 28.3 32.1 can be established. The result is a contributory 67-88-______------____ 15.8 34.1 41:otE 43.141.o 69-70-___ _ _ - - -- -______16.3 35.6 ii*: accident insurance that is not work-related but 71-72______16.8 36.3 39:4 42.4 44.9 73-74---- - _------____ 17.8 38.0 40.8 43.5 46.8 earnings-related. 75-79--__ ___ ------__ __ 18.9 40.0 42.6 45.7 47.5 s-84. ______------__ _ _ 19.8 41.2 44.3 47.3 43.6 The two new programs provide for hospital 86 and over ______20.9 41.9 45.4 49.2 47.7 and medical treatment, rehabilitation, and non- taxable cash compensation covering all the conse- carryover provision and more knowledge of how quences of an accident-Chat is, loss of income to file a claim. and physical and emotional suffering. Benefits Since persons aged 65 and 66 were not in the for income loss will be earnings-related, in con- program for a full year, they had less opportu- trast to the flat-rate benefits of the New Zealand nity to reach the deductible than those in the social insurance system. Moreover, liability is next age group. The percentage meeting the de- being liberalized to cover all injuries to wok-kers ductible rose steadily with each age group, and regardless of when or where they occtir. the rise in each year was about the same. For . The cost of the new system is to fall on em- every age group, however, the proportion reach- ployers and the self-employed for the earners’ ing the deductible was higher from year to year, accident compensation program and on motor ve- hicle drivers and owners for the motor vehicle compensation program. In a sense there is a gen- crnl revenue component : medical-hospital bene- fits will continue to be provided by the national system that is entirely govern- Social Security Abroad ment financed. The Act of 1972 was the end result of a series of reports starting in 1962, which examined the No-Fault Accident Compensation in feasibility of establishing a Government-operated New Zealand* program offering complete coverage for work- accident and occupational disease victims. The New Zealand is introducing a Government- 1 On March 9, 5973, the Government of New’ Zealand operated, no-fault accident insurance program that decided to extend coverage under the Accident. Compen- provides injured workem with a benefit of up to sation Act to nonworking ho&wives and other nonearn- ers (that is, students, retired persons, and the unem- four-fifths of their usual earnings. This is the ployed). As a consequence, the implementation date of latest move in the social field by a country that the schemes was postponed from October 11, 1973, to April 1, 1974. Government sources expect thnt the appro- *Prepared by Elizabeth Kreitler Kirkpatrick, Interna- priate amending legislation will be presented by the end tional Staff, Office of Research and Statistics. of August 1974.

BULLETIN, SEPTEMBER 1973 25 most notable of these reports was that of the compensation. This procedure has led to unequal Royal Commission on Compensation for Per- settlements for similar injuries, has overloaded sonal Injury in New Zealand, completed in 1967. the court system, and has militated against It is generally called the Woodhouse Commission prompt’rehabilitation on the part of the injured after its Chairman, Justice A. 0. Woodhouse. worker. The Commission was set up mainly because of Except for suits under the common law, New dissatisf,action with the existing mechanisms for Zealand’s workmen’s compensation system has re- determining responsibility and monetary com- sembled closely the basic form of the system in pensation for injuries suffered by an employee in the United States with employers insuring them- the course of his , and by the general selves through private insurance carriers. Only public in a highway accident involving the use work-connected injuries and occupational dis- of a motor vehicle. The warrant establishing the eases have been covered in the past. Compensa- 196’7 Commission, in fact, restricted its investiga- tion has been related to medical expenses, tion to the question of compensation for injuries earnings-related cash benefits, and rehabilitation “arising out of (including diseases) services. Medical treatment in hospitals has been suffered by persons in employment.” It did not provided to workmen’s compensation cases free cover injuries from highway accidents or those of charge under the national health service of workers outside their employment. scheme, and the costs of such treatment have not In the course of its inquiry the Commission been charged back to workmen’s compensation. found it desirable, however, to extend its exami- There is, in addition to the common law proc- nation to all accidental injuries regardless of ess and workmen’s compensation, indirect in- cause or place of injury. The Commission’s final volvement of the Department of Social Security report, which provided the broad foundation for in the payment of benefits to injured workers. the Accident Compensation Act, called for com- First, the Department has provided assistance to prehensive, full-time coverage for all New Zea- many of the disabled and their families because land citizens regardless of how or where they the maximum ceiling on the weekly benefit has were injured. I been NZ $32. This amount is considered too low to maintain a minimum standard of living in a BACKGROUND country where the average weekly earnings of and earners in 1971 was NZ $59.73 a The new law creates one uniform system for week. Second, as the work-related disability pen- the handling of accident compensation cases in- sion is payable only for a maximum of 6 years, stead of the former variety of ‘methods. Accident the Department of Social Security has had to compensation in New Zealand has been dealt make assistance payments to the disabled when with through the common law process, by the the benefit is terminated. The social security workmen’s compensation program, and by an as- fund is contributing an estimated NZ $2 million sistance program administered by the Depart- a year in such cases. ment of Social Security. All victims of personal injury have been able to sue for damages under common law on the basis of negligence. Those COVERAGE who have been successful receive compensation Under the new legislation, regular members of covering their losses (medical costs, earnings the labor force receive occupational disease and losses, and pain and suffering). 24-hour accident coverage; others are to be pro- As workmen’s compensation has not precluded tected for occupational diseases and work-con- common law action with respect to employment nected accidents only. Wage and salary earners injury in New Zealand, it has been the norm for and the self-employed must fulfill a 12-month seriously injured employees to pursue remedies residence requirement (not necessarily continu- under both processes simultaneously, If the em- ous) to qualify for continuous (24 hour) cover- ployee is successful in common law action, he is age. In addition, an employee must have been in not entitled to’ workmen’s compensation. If he is paid employment for 160 hours or, more during not successful, he can fall back on workmen’s the 8 weeks preceding his accident, or have cus-

26 SOCIAL SECURITY tomarily been in paid employment at .least 10 loss of bodily functibns and, at the discretion of hours a week, or must earn at least NZ $500 per the Commission, for disfigurement and pain and year. According to 1969 returns, 90 suffering. In case of death, survivors will receive percent of the working population earns more compensation if they were dependent upon the than NZ $500 per year and would therefore fin- deceased. All the compensation levels can be ad- ancially qualify for continuous coverage. justed yearly, at the discretion of the Accident The 10 percent of employed workers who do Compensation Commission, on the basis of in- not qualify for continuous coverage (newly im- creases in the cost-of-living index. migrated workers, apprentices, and part-time Temporary disability bemfit.-Under the 1972 workers, for example) will be protected by the law, a temporary disability benefit will be paid “work accident cover” scheme. This is basically a at the rate of 80 percent of previous gross earn- workmen’s compensation program that will pro- ings (including , , and tect them for occupational disease and work- bonuses) 3 up to a maximum level of NZ $160 per related accidents. Travel to and from work will week. The first 6 days of incapacity are to be also be covered in the work accident program. paid by t,he employer at the full amount of The main groups outside the labor force who (es&ding overtime). If the employee had were not covered by the initial legislation are the been employed for less than ‘7 days before the sac- young, nonworking housewives, retired persons, cident or had intended to terminate his employ- and the unemployed a= The Commission report, ment 6 days after the accident, the Commission in recommending a mliversal accident compensa- will cover the first 6 days of disability at 80 per- tion plan, had paid particular attention to house- cent of full wages (excluding overtime). wives and the retired. The report had recom- Permanent d&abiZity benefit.-The Act also mended that these two groups be paid at a provides for a permanent disability benefit paya- minimum benefit rate of NZ $11.75 per week, ble when the Commission considers that the in- subject to a %-day waiting period. The Govern- jured party’s medical condition is stabilized and ment in arguing for passage of the bill noted that all practical steps have been taken toward that the scheme did not cover as wide a group as his retraining and rehabilitation. The benefit is that recommended in the report but maintained then calculated with respect to previous earnings that coverage of the entire population was not as well as to future capacity to earn. It is paya- feasible at present. The Government cited the ble up to a maximum level of NZ $160 a week problems of establishing a method of financing and until age 65 when the individual becomes el- an employer-funded program that would include igible for the non-means-tested superannuation all citizens and also pointed out the absence of . ’ any method of determining an equitable cash After the date of assessment, this disability compensation (temporary and/or permanent) for benefit cannot be reduced because the injured housewives and other nonearners, without w&ge worker’s earning capacity has improved. The or salary to serve as a yardstick. benefit amount may be increased, however, if his The motor vehicle insurance provides medical condition has further deteriorated as a result of treatment, rehabilitation, and cash compensation the injury. In addition, for a full-time worker to everyone for injuries sustained in motor ve- the amount can be raised if it falls below a mini- hicle accidents. This provision fully meets the mum prescribed amount yet to be determined. Woodhouse Report recommendations. Benefit for Zoss of potential earning capacity.- The provisions for temporary and permanent disability establish the benefit at 80 percent of BENEFITS regular earnings for regular members of the labor force. Trainees, apprentices, and students The Accident Compensation Act of 1972 pro- working part-time do not, of course, have regu- vides earnings-related payments in the event of lar earnings on which to base the calculations. loss of earnings capacity and lump-sum pay- ments according to a fixed of rates for s The calculation of previous earnings excludes non- taxable means-testedwelfare benefits (e.g., the age pen- 2 See fc¬e, page 25. sion and the family benefit).

BULLETIN, SEPTEMBER 1973 27 Moreover, any pay they do receive is unrelated pen&ion funds. Medical benefits, which include to expected wages or in their future ca- artificial limbs, aids, and certain clothing, will reer. If these young people become disabled in a also cover damage to teeth. Costs of transporta- %overed” accident,4 the Commission is empow- tion, food, and lodging necessary for obtaining ered to establish hypothetical earnings rates medical treatment will be paid by the Accident based on potentials. This determination is Compensation Commission, which will also reim- made between ages 16 and 21, the prime burse employers for such expenses. or perio . A full-time student who is Rehabilitation.-Services provided to the in- not in paid em/ loyment would be eligible for jured are to emphasize rehabilitation. Every ef- such a benefic only if he were injured in a motor fort is to be made to ensure as speedily as vehicle accident. possible the restoration of the handicapped to Lump-sum payments to injured workers.- the “fullest physical, mental, social, vocational Lump-sum payments are to be made for loss of and economic usefulness of which they are capa- bodily function and for other losses, such as the ble.” The Accident Compensation Commission loss of capacity for enjoying life (including loss will promote and coordinate public and private from disfigurement) and for pain and mental facilities for rehabilitation and ensure the train- suffering. Compensation for the loss of bodily ing or retraining of any incapacitated earners. function is to be determined on a scheduled-basis and will be paid up to a maximum of NZ $5,000. FINAN’CING Compensation for pain and suffering will be de- termined on a case by case basis and will be paid The two schemes are to be financed through up to a maximum of NZ $7,500. contributions on a merit-rated basis and are not Survivor’s benefits.--In addition to paying fu- expected to require Government funding. Funds neral expenses of the insured, the Commission for the earners’ accident compensation program will make lump-sum payments of not more than are to come from contributions from employers NZ $1,000 to the dependent widow or widower and the self-employed. Contributions will vary (including dependent divorced spouses) and of within a range of 1, of 1 percent to 5 percent of NZ $500 to each child up to ,a maximum of NZ earnings on a maximum of NZ $10,400 earnings $1,500. Compensation up to one-half the disabil- a year. The self-employed are to pay on a mini- ity pension of the insured is payable to a de- mum of NZ $1,000 earnings. For employers and pendent surviving spouse until he or she remar- the self-employed with safety records worse or ries or reaches age 65. Children are eligible for better than others in the same class, the pro- one-sixth of the disability pension (one-third if grams provide for penalty rates and rebates, as they are double orphans) until they reach age 16, appropriate, This measure is intended to encour- or age 18 if they are students. Lump-sum pay- age employers to improve plant safety and thus ments equal to survivor’s benefit payments for 2 reduce accidents. years will be made to widows’ and widowers Funds for the motor vehicle accident program when they remarry. will come from contributions made by owners illedical benefits.-As in workmen’s compensa- and drivers of motor vehicles. Contribution rates tion, medical and hospital treatment will be pro- for motor vehicles will vary on the b,asis of gen- vided free of charge under the national health eral characteristics and weight of the vehicle: service system. The cost of such services will not tractors, NZ $1.60 ; motorcycles, NZ $7.90; be charged back to either of the accident com- standard motorcars, NZ $11.35; public taxicabs, NZ $46.00. The standard tax on driving permits 4 Under the initial legislation, for example, a student working more than 10 hours a week or earning NZ $500 u-ill be NZ $2.00 a year, with provision for pen- a year would be covered for all accidents regardless of alty rates for “drivers whose driving or accident when or where they occurred. Students working less than record is significantly worse than average.” 10 hours a week and earning less than NZ $500 would be covered for work-related accidents only. All students, whether or not they work, would be covered for injuries sustained in a motor vehicle accident. Greater coverage ADMINISTRATION will be provided under the yet-to-be promulgated amend- ing legislation. The two interrelated compensation programs

28 SOCIAL SECURITY are to be administered by a three-man Accident and what effect do different systems Compensation Commission. The Commission, in have on retirement-related attitudes? Social Se- the Department of Labor under the Minister of curity Research Grants Project 56047 produced Social Security, will have control over the collec- two reports in this area-“Work After Retire- tion of contributions, the p,ayment of cash bene- ment: Some Psychological Factors” and “A fits and awards, the assessment of incapacity, the Comparison of the Effects of Two Retirement investigation of injuries, and the development, Systems.” The exploratory research was carried coordination, and supervision of accident preven- out at the Center for the Study of Aging and tion and rehabilitation programs. The Commis- Human Development of Duke University and in- sion can delegate much of its authority for ad- volved men on university faculties who were in ministering the two programs; it can, for good health and financially secure. example, appoint “agents” to collect contribu- The ,authors, Gerda G. Fillenbaum and George tions and handle claims. L. Maddox (Director of the Center), found that It is not known at present what role the insur- the retirement decision is based on a set of mu- ance industry will play. The Woodhouse Report tually reinforcing preretirement factors-such as emphasized the importance of a centralized ad- the importance of the work being done, personal ministration and advised against private insur- involvement in work-related matters, a distaste ance companies participating in any aspect of for retirement, and an attempt to circumvent re- the two accident compensation programs. The tirement. Although environmental matters (as- Accident Compensat.ion Act is unclear as to their surance of continued access to work facilities and role. No private group may underwrite the Gov- local availability of paid work, for example) ernment-established funds, but there does appear seemed to have little relevance to continued to be a role for private companies in the han- working, certain specific matters (such as the dling of claims. The Act states that the Commis- possession of particular skills) did appear to be sion “may” from time to time appoint as one of important. its agents any insurance company or association. The reports indicate that those under a “flexi- Such ,agents will be paid for services rendered ei- ble” retirement system (that is, they lost tenure ther by fees or by commissions. at age 65 and were forcefully reminded about re- tirement for the next 5 years) were more likely to favor retirement, to have made plans for both work and leisure, and to be better adjusted after retirement than were those under a, more “ab- Research Grants Studies rupt” retirement system- at age 70.

Section 1110 of the Social Security Act pro- DETERMINANTS OF INTERSTATE MIGRATION OF vides for a research grants program. THE ELDERLY The grants given by the Social Security Admin- istration under this program are to nonprofit or- The literature dealing with patterns and deter- ganizations for research in the broad area of so- minants of population mobility is massive. Most cial security. Reports on two recently completed of the published research concentrates on popula- grants projects are summarized below. Similar tion movements as a whole, or on movements of summaries will be published in the BULLETIN as the labor force. the projects are concluded. Interstate migration rates of persons aged 65 and over arc the focus of a research project di- rected by Steve L. 13arsby and Dennis R. Cox at WORK AFTER RETIREMENT the College of Business and Public Administra- tion, University of Arizona, 1970-72. They What psychological factors influence men to found that research directed primarily at migra- continue working after mandatory retirement tion patterns of the elderly is extremely scarce.

BULLETIN, SEPTEMBER 1973 29