There’s broad community support for a national disability insurance scheme. But there’s also series danger with rushing in head-first.

The NDIS (now called DisabilityCare) has the potential to dramatically improve the lives of Australians with the most profound or severe disabilities. But as the Productivity Commission warned, if not properly implemented, program costs could threaten its own sustainability. It recommended an implementation plan with a three-year preparation period beginning in 2011 to complete a checklist of preparatory work before rolling out the program in local launch sites in July 2014. These “demonstrations” would then provide a test of the new program’s effectiveness in providing services to its targeted population in a cost effective manner.

No one knows what the costs of NDIS will be. The Productivity Commission’s best guess was that the current program — serving 172,000 people with profound or severe disabilities at an annual cost of $7.1 billion — would turn into the DisabilityCare Australia program serving 411,000 (2.2% of the population under the age of 65) at an annual cost of $13.6 billion by 2018 when fully implemented. But the commission warned that these costs were highly sensitive to two sets of issues.

The first are related to program rules: what exactly are the criteria for program eligibility, and what exactly are the criteria that will be used for assessing their needs and paying for their “reasonable and necessary” services? Establishing eligibility for disability programs is a difficult administrative task. For instance, the Productivity Commission estimated only 60% of the 680,000 Australians (3.45% of the population under age 65) with profound or severe disabilities would come onto the program.

But slight changes in the rules or their interpretation would have substantial effects on the number of people with profound or severe disabilities deemed eligible for the program. And establishing the services that are “reasonable and necessary” for them will be equally difficult to determine and sensitive to the assessment tools the agency uses and how the new interactions between participant, manager, and agency to reach a final determination work out.

The Productivity Commission warned being too formalistic would result in inadequate service, but too loose an approach could result in unsustainable costs. The government’s own rules for becoming a participant are still in draft form, two months before they are supposed to be implemented in the four roll-out sites — the fifth has already been postponed to 2014. This is not a criticism of the rule-makers, since the NDIS was only passed on March 29 — but it suggests the four demonstration sites will not be ready for business on July 1 and therefore not ready as test sites to fine tune program rules and protocols.

The second are related to quality control: how can the NDIS ensure the program rules are uniformly carried out? This was a major criticism of the old system, where service provision varied dramatically across region. This is not a trivial issue — not only are the criteria for establishing eligibility difficult to establish, but it is very hard to ensure uniform evaluations across regions or even individual agency evaluators.

In the US a recent study using administrative records data containing information on which Disability Determination Service agents were “easy” or “hard” evaluators of eligibility for Social Security Disability Insurance benefits, based on the same written criteria, showed that 23% of applicants’ eligibility determination outcomes were based on whether their case was determined by a hard or an easy evaluator.

The Productivity Commission was well aware of this issue and urged that before the program went into the field that the data and the systems that underpin these data must be in place or NDIS managers would not be able to effectively monitor outcomes or keep costs under control. It is not clear that such systems currently exist at the four test sites that will be open for business in two months.

In 1626 King Gustavus of Sweden changed the design of the warship Vasa, making it too top-heavy. It duly sank following the first gust of wind on its maiden voyage and is now the centrepiece of a museum dedicated to the folly of such politicians. The NDIS is too good an idea to risk sinking because it was rushed into the field without completing the set of checklists recommended by the Productivity Commission.

What’s the rush?