 Attending a conference in Sydney this week as part of a ten day business trip, I could not help but compare the state of our micro economy to that of the continent down-under. Without going into specifics one can safely say that the aussies have proudly shouldered the recession much better than most would have expected. Typically, they undertook various stiff reforms to improve productivity and competitiveness of their extractive industries exporting mainly to Chain and India. Another urgent reform is surely that intended to improve the sustainability of the health and welfare sector. The Australian government’s new National Health and Hospital Network will help ensure the long-term sustainability of Australia’s finances and underpin high-quality health services into the future.
This strategy is fully funded over estimates for the future and wholly consistent with the Government’s fiscal strategy. To help meet rising health care costs, the Aussie’s reforms are designed to deliver greater efficiencies in health and hospitals - particularly through activity based funding. I reflected that what the Australian politicians are promising their voters seems very similar to the promises we hear during pre-election campaigns of both parties.
Let us hear it again... we need to improve productivity in the health system, place a greater focus on people and their health needs, and improve the safety and quality of health care. But apart from improving the future sustainability of medical care and the educational system I felt that there exist further similarities in the finance services field that Aussie politicians deployed to weather the economic crisis. Looking back to our banking resilience I could not help compare the two countries.
There is a parallel that with minor exceptions Aussie banks rode the economic hurdles much like our banks have done, without the need for bailouts or nationalisation.
Does this mean that our prospects for the near future look rosy as recently affirmed by our P.M? The answer is yes, albeit with a cautious optimism we have weathered the storm much better than others (not to mention PIIGS : Portugal, Ireland, Italy, Greece and Spain). Our unemployment is rising but it is nowhere as high as the 20 per cent reported in Spain, yet this is no consolation as our economy tends to react belatedly in a time warp distortion than may be a surprise to many. The opposition contends that the Prime Minister’s recent claim that Malta “has come out of the recession” – is not to be rejoiced at. But do you blame the Prime Minister to act triumphantly when all around us in Europe we still are witnessing such dismal economic trends? A bit of optimism will go a long way to sugar the pill of tough reforms that the economy must still need to undergo to fine tune its infrastructure and start repaying national debts. To give credit where credit is due we cannot but praise the Finance minister’s resolve to tackle unemployment hurting larger manufacturing units.
They faced a drop in dollar sales coupled with rising wages and energy costs so he resorted to applying surgery to the patients. It is revealed through NSO that the government’s economic recovery plan, dished out a generous €10 million to local businesses in order to cushion a surge in unemployment. Another strategy is to fast track the City Gate embellishment project designed by world-famous architect Renzo Piano. Although not embraced by all, the project at least makes a start to reinvigorate the cruel image left by the war time ruins in the centre of our capital city. Officially, an investment fund was supposed to be created, and the revenue itself raised from the sale and rent of government property, so as ‘not to be a burden on the taxpayer. It qualifies as part of a stimulus for local construction magnates who all clamour for more heavy duty tenders. Who knows this might also dampen the feeling of a mild recession in the next three years and generate new employment.
As has been widely reported, this initiative comes with a modest €80 price tag and a deadline of 2013 just in time for the next elections. But taking the cue for the title to this article and changing the subject completely one cannot but admire the guts of US President Barack Obama who almost single-handedly piloted the health insurance reform that was opposed tooth and nail by the Republicans and some Democrats.
Only last Monday the US House of Representatives has given its final approval to a sweeping healthcare overhaul, expanding insurance coverage to nearly all Americans. The vote was surprising thinly balanced with a hard fought margin of only seven votes (219-212). It is a historic moment for the largest democracy to witness the most dramatic health policy changes in 40 years. The vote sends the bill, already approved by the Senate, to Mr Obama to sign into law. It is reported in the Australian press as a major break through for a defiant President who took no chances and lobbied personally in the last days prior to the crucial vote. What does it mean and how will it work is not easy to surmise but it simply extends insurance coverage to 32 million Americans.
Sounds a lot like Robin Hood in the English tradition of hitting the rich insurance barons to help providing a government health plan for the poor. Additionally it prohibits insurance practices such as refusing to cover people with pre-existing medical conditions.Going through the detailed print one notices how with this law micro companies with 25 or fewer employees could potentially be eligible to receive a 35% tax credit for buying health insurance as early as this year. By 2014, such companies could see that credit rise to 50%, while even smaller companies could receive a full tax credit to provide insurance for their employees granted their average salaries are below US$25,000 (€28,500) annually. Larger SME’s face steep fines if they fail to purchase insurance. It is still a mystery where and how the Obama administration will fund this reform. Really and truly the US government will pump money into high-risk insurance pools in the States, making coverage available for people in frail health who have been uninsured for at least six months. The premiums could still be a pain, but for people who need continuing medical attention, it could make a dramatic difference. Quoting a senator he claims “for people who have not been able to get anything, who have expensive chronic illnesses or other conditions, it could be a lifesaver,” .
But in his words there is a catch, however since the US$5 billion Obama has allocated for the program is unlikely to stretch beyond 2014 which is his re-election date. In fact, government experts have projected it could run out next year. It is not perfect and of course like everything else in life the insurance reform will create both winners and losers. On the plus side, it gradually closes the prescription coverage gap, improves preventive care and puts a new emphasis on trying to keep old age pensioners struggling with chronic diseases in better overall health. The minus side comes in the shape of criticisms that it cuts funding for popular private insurance plans offered through the Medicare Advantage program.
Thus it is reckoned that about one-quarter of old age claimants have signed up for the medicare plans, which generally offer lower out-of-pocket costs. “It’s not all black and white; sometimes it’s gray,” said James Firman, president of the National Council on the Aging. “Overall we think this medical scheme is very good, and will provide some significant benefits for pensioners. To conclude both Malta and Australian are taking serious measures to rebalance the health deficit and in our case cut down on the 20,000 waiting list.
The Obama spirit of “yes we can “ has triumphed and it should help us in our resolve to stop our navel gazing and start taking immediate measures to solve our lack of beds, source our shortage of human medical resources and strive for a sustainable welfare system.
George M. Mangion
gmm@pkfmalta.com
The writer is a partner in PKFMalta an audit and business advisory firm
|