Tuesday, 7 October 2008

McCAin vs Obama's Health Plans

As Obama has argued, the health of the nation's citizens is very
important in making US competitive in the world.

With this in mind, it is obvious that Obama's plan is much better and
Malaysia should emulate it. Obama's Health Plan is much more than what
is offered by the Malaysian Government under BN. In fact, Malaysia is
more similar to McCain's plan, making Malaysia more capitalist than USA.
So much rhetoric about a compassionate BN government.

McCain wants to treat Health Benefits as taxable salary, but give US5000
dollar rebate. Malaysia treats all Health Benefits as taxable salary and
never gives any rebate for Health Insurance.

Under Bush, Health Benefits are not taxable salary, which makes the
current US more humane and compassionate compared to Malaysia. No wonder
US is much more competitive compared to Malaysia. They have much
healthier workers.

All may change with McCain's plans. Despite giving rebates, it
discourages the giving of Health Benefits. Employers will be tempted to
offer higher salaries and workers will be tempted to under insure their
health care. What makes it worse is that, group insurance will be
difficult to negotiate making it much more difficult for older workers
to get health coverage.

Obama's plan offers competition to the private health care by offering
government organised and subsidised health care insurance. This is much
better than the current Malaysian BN govenment offering.

No wonder Malaysia is not competitive and cannot attract skilled
workers. Not only do they have low salaries, they also have much less
health care than even USA.

Malaysian may argue that patients suffering from contagious diseases are
given free treatments at government run hospitals, but this is most
probably provided for free also by the US government.

October 7, 2008
Business Cool Toward McCain's Health Coverage Plan

American business, typically a reliable Republican cheerleader, is
decidedly lukewarm about Senator John McCain's proposal to overhaul the
health care system by revamping the tax treatment of health benefits,
officials with leading trade groups say.

The officials, with organizations like the U.S. Chamber of Commerce, the
Business Roundtable and the National Federation of Independent Business,
predicted in recent interviews that the McCain plan, which eliminates
the exclusion of health benefits from income taxes, would accelerate the
erosion of employer-sponsored health insurance and do little to reduce
the number of uninsured from 45 million.

That is largely the argument made in recent days by Mr. McCain's
opponent, Senator Barack Obama, who has revived a dormant campaign
debate over health care with an intensified attack on the McCain plan.
Conscious that the issue plays well with swing voters, Mr. Obama devoted
a speech on Saturday to characterizing Mr. McCain's plan as "radical"
and a "Washington bait and switch," and he has reinforced the message in
four television advertisements.

That has set off a furious back-and-forth between the campaigns, with
the McCain campaign countering that Mr. Obama's plan also would
undermine employer coverage by mandating that medium and large companies
either provide insurance for their workers or pay a tax. The payments
would help subsidize a new government health plan for low-income people,
and some economists believe it would entice workers away from their
employer-sponsored coverage.

Mr. Obama, the Democratic presidential nominee, opened his assault two
weeks ago by telling crowds that Mr. McCain "wants to tax your health
benefits." He did not explain that Mr. McCain, the Republican nominee,
would offer tax credits in exchange to cover the increased liability for
many Americans.

Over the weekend, Mr. Obama more accurately characterized the McCain
plan as a swap but one that would work to the detriment of millions.
Middle-class families, he said, would "watch the system they rely on
begin to unravel before their eyes."

The business leaders said that was also their fear. Despite steady
declines this decade, employers still provide coverage to 62 percent of
Americans younger than 65. Surveys show that they want to continue doing
so to attract and maintain a productive workforce.

The business leaders forecast that Mr. McCain's free-market approach
would impose particular burdens on small businesses and old-line
manufacturers that are already struggling.

"To some in the business community, this is very discomforting," said R.
Bruce Josten, executive vice president for government affairs at the
Chamber of Commerce. "The private marketplace, in my opinion, is ill
prepared today with an infrastructure for an individual-based health
insurance system."

Health economists are ideologically divided over Mr. McCain's plan.
Analysts who support it project that it might provide coverage to 25
million people, while critics predict that the number of newly insured
would peak at five million and then decline.

Though Mr. McCain says his plan would not add to federal spending, the
Tax Policy Center has estimated that it will cost at least $1.3 trillion
over 10 years. And while right-leaning economists emphasize that the
plan would provide a tax cut for the average American, opponents respond
that certain high-earners will face an increase and that some in the
middle class may break even only by reducing their coverage.

The centerpiece of Mr. McCain's plan is the elimination of the provision
that has, since 1954, excluded the value of employer-sponsored health
benefits from a worker's taxable income. The exclusion can be worth
thousands of dollars for some workers.

In its place, Mr. McCain would offer all Americans income tax credits of
$2,500 per person or $5,000 per family for heath coverage, regardless of
how they bought it.

Mr. McCain would not change the ability of companies to deduct health
benefits as a business expense on their corporate income taxes. And
advisers have said he would continue to exclude the value of health
benefits from the payroll taxes that finance Social Security and Medicare.

The income-tax exclusion benefits 162.5 million Americans but costs the
federal government $145.3 billion in foregone revenue, second only to
the tax break for retirement account contributions, according to the
Congressional Joint Committee on Taxation.

Still, the exclusion has encouraged the pooling of workers into large
purchasing groups that tend to lower costs. And with group coverage, no
one can be denied coverage, everyone pays the same rates and the healthy
and wealthy essentially subsidize the sick and the poor. Consequently,
it is often more expensive to buy equivalent coverage as an individual,
partly because insurers pass along the administrative costs of weeding
out unacceptable risks.

The exclusion has long been criticized as unfair because the 18 million
people who buy health insurance on their own are not entitled to it.
Critics also say that it is most valuable to those in high tax brackets
with the costliest health plans, that it contributes to job-lock, and
that the subsidization of group insurance encourages people to buy more
coverage and consume more health care than they need, driving up health

Mr. McCain and his health advisers argue that replacing the tax
exclusion with tax credits for all would encourage consumers to shop
more deliberately, stoking competition in the marketplace and lowering
premiums. He would allow them to shop for policies across state lines.

"It will help to change the whole dynamic of the current health care
system by putting individuals and families back in charge and forcing
insurance companies to respond with better service at lower cost," Mr.
McCain wrote recently in The New England Journal of Medicine.

For some workers, depending on their tax bracket and insurance costs,
the new tax credits would exceed the value of the tax exclusion, making
the swap profitable. But with the average employer-sponsored family
policy costing $12,680 this year, other workers would find the exchange
a losing proposition. They would either have to spend more, reduce their
coverage or persuade employers to make up the difference.

Officials with eight business trade groups contacted by The New York
Times predicted the McCain plan would raise costs and force some
employers to stop providing health benefits.

A recent survey of 187 corporate executives by the American Benefits
Council and Miller & Chevalier, a consulting firm, found that
three-fourths felt the repeal of the tax exclusion would have a "strong
negative impact" on their workers. Only 4 percent said they would
provide additional pay to fill any gaps.

John J. Castellani, president of the Business Roundtable, an association
of leading chief executive officers, said his group instead supported
extending the tax exclusion to those who bought coverage on their own.

"One of the things we don't want to do," Mr. Castellani said, "is
jeopardize 170 million Americans who do get insurance through their

A number of business officials are worried that Mr. McCain's tax credits
would lure young and healthy workers into the individual market to take
advantage of cheaper, less-generous policies. That, they say, would
leave employers to cover an older and sicker pool of workers, forcing up

Workers who found that they had less buying power with the tax credits
than with the tax exclusion could be expected to pressure employers to
raise salaries or benefit subsidies, the business officials said.

"There are huge questions about the $5,000 per family being an
insufficient amount in terms of being able to purchase the same
coverage," said Mr. Josten with the Chamber of Commerce.

Helen B. Darling, president of the National Business Group on Health, a
coalition of 300 companies, agreed that many workers would face a net
loss. "The last thing you want to do to the average working person,
especially when you're bailing out big financial companies, is take
something they hold near and dear partially away," Ms. Darling said.

Economists forecast that the problem would worsen over time because Mr.
McCain, according to advisers, would index his tax credits to overall
inflation. Health insurance premiums have grown four times faster than
inflation since 1999.

James A. Klein, president of the American Benefits Council, said concern
that the tax credits would not keep up with inflation was a primary
reason his 280 member companies "take a very dim view" of repealing the
tax exclusion.

Mr. McCain theorizes that if the government's subsidization of health
care is capped, consumers will cut back on their use of the system,
slowing the growth in spending. But critics worry that he overestimates
his ability to control health costs, and that a growing number of people
will find they cannot obtain traditional coverage.
Sabah is heaven. Beautiful shark-free beaches and mountains next to
civilisation with no natural and man-made disasters except Malaysia.
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