Medical-device tax up for repeal

Medical-device tax up for repeal

It's so much easier for Congress to spend than it is for Congress to raise revenue necessary to support spending.

A vote last week in the U.S. Senate highlights the sometimes-foolish inconsistency of our federal legislators — their penchant for passing hugely expensive programs they are reluctant to pay for.

There is no doubt that President Barack Obama's Affordable Care Act — Obamacare, as it is known — will be expensive and that paying for it will require substantial increases in health care premiums for individuals and families — as well as substantial tax increases, some of which are yet to be revealed.

But one source of revenue for Obamacare is well known — it's a 2.3 percent excise tax on makers of medical devices. The provision already took effect on Jan. 1, and it is expected to generate substantial revenue. One news report estimated that Massachusetts medical-device-makers alone will pay more than $400 million.

As taxes go, this one is a real clunker. For starters, it's not a tax on business profits. It's a tax on gross sales, meaning that even if a company is not profitable, it still is liable to pay the tax.

That chilling effect has some companies promising to cut back their research budgets, reduce the number of their employees and pass the cost on to hospitals and patients.

It's a truism that taxing something means that you get less of it — meaning that medical-device-makers will face a serious disincentive to pursue the kind of medical advances that can be not just life-changing, but life-saving. So it's not a step forward in terms of improving medical care.

Obviously not well-conceived, the medical-device tax proposal was included among the 1,000-plus-page Obamacare legislation, a bill that largely went unread by legislators, and it was passed into law.

But now legislators, hearing complaints from constituents, are talking about repealing the tax.

Last week, the Democratic-controlled U.S. Senate voted 79-20 in favor of repeal. The vote had more symbolic than substantive meaning because it came on a nonbinding resolution.

But the numbers — far more than necessary to overturn a possible veto by Obama — speak volumes. Meanwhile, legislation in the U.S. House to repeal the tax has 212 co-sponsors.

U.S. Sen. Amy Klobuchar, a Minnesota Democrat who is leading the charge for repeal, has vowed she will "continue to work to get rid of this harmful tax so Minnesota's medical-device businesses can continue to create good jobs in our state and improve patients' lives."

Another state hard hit by the medical device tax is Massachusetts, where Democratic U.S. Sens. Elizabeth Warren and William "Mo" Cowan, a recent appointee who replaced former U.S. Sen. John Kerry, also are working for repeal.

One, of course, might ask why many of the same U.S. senators who passed the medical-device tax are now working to repeal it. There is no good answer.

It's no surprise that Republicans oppose the tax. They never supported it in the first place. But the same cannot be said for Senate Democrats.

The problem is that even if the medical-device tax is repealed, the spending for Obamacare will go on. If this source of funding for Obamacare is ultimately eliminated, the cost will simply be added to our federal budget deficit and national debt.

Providing benefits but not paying for them was one of the major problems with President George W. Bush's decision to expand prescription-drug benefits for Medicare recipients. It's apparent the country is headed down the same path with Obamacare.

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Categories (2):Editorials, Opinions

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Sid Saltfork wrote on March 26, 2013 at 9:03 am

The News Gazette criticizes Obamacare; but offers no solutions to the problem.  Why doesn't the News Gazette give an opinion on the number of working poor whose employers offer no health insurance?  Why not look at the percentage of working people who have no health insurance; and do not earn a livable wage to buy health insurance?  Look around you at the number of people lacking insurance.  Without it personal bankrupticies increase; and Medicaid which is tax supported pays more.

It is easier to play politics with the problem than confront it.  Offer a solution; or admit that you do not care about it.  After all, the working poor are not Your people.  They are just the faceless mass that serves you. 

GeneralLeePeeved wrote on March 26, 2013 at 10:03 am

I agree with Sid's point about the N-G, like ALL of the Repubs in Washington, being more than willing to criticize, but never offering an alternative or a solution.  If the N-G wants to nitpik about pieces of the new healthcare act, that's their perogative....however, why don't they try discussing one of the underlying reasons why the costs keep going up....the fact that, only in the U.S. do we find it acceptable for health insurance companies to make the ridiculous profits that they continue to rake in.  In the most recent listing, there were 11 healthcare insurance companies listed in the Fortune 500, with 5 of them having profits in excess of $1 billion.  Why isn't this the focus of the N-G's ire?  I'm all for free enterprise, but why should my premiums go up just so a healthcare executive can get a 5 digit increase in pay?  Changing the way that they are regulated would probably have little impact, since by the time the lobbyists are through paying off the legislators, any new regulations would have little bite left in them (as we saw with the financial institutions).  All I'm saying is that instead of critiquing a long-overdue piece of legislation that nobody previously had the spine to implement, they should follow the money.   

SaintClarence27 wrote on March 27, 2013 at 8:03 am

There should be a group cooperative non-profit insurance company. We could start one.

bluegrass wrote on March 27, 2013 at 10:03 am

I agree with Sid's point about the N-G, like ALL of the Repubs in Washington, being more than willing to criticize, but never offering an alternative or a solution. 

I'm sure we'd all be interested to hear how passing a bill that costs enormous amounts of money, and offers no realistic way of ever actually paying for it, is a viable solution. 

You say, "I'm all for free enterprise, but....."  But what?  Only if it works this one time in your favor, right?  If you think that Obamacare is a "long overdue piece of legislation," you are, in fact, in favor of the opposite of free enterprise.  

Obamacare, or the inappropriately named Affordable Care Act, was written with the intention of putting health insurance companies out of business.  It's already happening.  There are far fewer choices for health insurance today than there were even 3 years ago, and there will be far fewer in 3 more years.  The intention of the bill is to favor the big companies, and make it impossible for the smaller guys to make any money.  So the big keep eating up the small, and if things stay the way they are now, in 20 years my guess is they'll be 1 or 2 health insurance companies.  So much for free enterprise right?  Too big to fail?  Wasn't that exactly what got all the lefties with their panties in bunch during the Occupy Space movement a while back?  And yet, in this case they beat their tom toms and demand it.

Many people today live under the false premise that somehow the U.S. Government is going to stamp a peice of paper and make health insurance and health care affordable for everyone.  The system we have/had is not perfect, but dumping Obamacare isn't going to do anything but make the entire situation worse.  Most have no idea what's even in the bill or what it does, but the name sounds great, doesn't it?  In the coming years you'll find out, and you won't like it, and you'll probably blame repubs.  You'll say, "If only repubs didn't hate women and want to starve children....  If only they just didn't enjoy enjoy killing puppies so much, we could really make Obamacare work!!!" 

SaintClarence27 wrote on March 27, 2013 at 10:03 am

You are aware that people can be in favor of free enterprise in some areas and not others, right? Not everything has to be this black and white anarchist v. communist schtick. The government does some things well, and some things poorly. Honestly, they do a pretty good job with health insurance for most countries that have it.

As for your contention that Obamacare is putting health insurance companies out of business, that is nonsense. The buyup of smaller insurance companies' market share (and the resultant franchising of others) is more of a product of the Medicare part D boondoggle than anything else. The reason why the pooling favors large companies is that their job is to POOL THE MONEY TOGETHER.


bluegrass wrote on March 27, 2013 at 12:03 pm

I am aware people can be in favor of free enterprise in some areas and not others, thank you for asking.  Tell me, what difference does it make if one is in favor of free enterprise in, say, the pool cleaning business, while the pertinent discussion revolves around policy related to health care and insurance?

What does "the resultant franchising of others," mean, and what does the prescription drug portion of Medicare have to do with anything.  If you could  give us some examples of how Medicare Part D has pushed insurance companies out of the health care business in the past 3 years, I would really like to see that.

With regard to your claim of "nonsense," let's just look at two aspects of this legislation that prove my point.  First, it outlaws Medicare Advantage plans, which millions of seniors utilize, effectively scrapping one of the few successful applications of the Medicare program.  Gone forever.  Second, it makes illegal, insurance policies that don't offer the Obamacare minimum coverage requirements.  Some people only purchase what they can afford, which might mean some coverage for a lower price, but they will be unable to do that in 2014.  So just looking at those two aspects of the new healthcare provisions alone, you will see hundreds of companies pushed out of the market.  That doesn't even begin to touch hundreds of other companies that cannot keep up with the added cost of accepting everyone regardless of medical condition, in addition to changing the way companies can even determine to pricing for the policies depending on age and sex of the client, in addition to the massive regulatory requirements heaped onto private companies.     


SaintClarence27 wrote on March 27, 2013 at 2:03 pm

The resultant franchising simply means that large corporations consolidated and franchised out. Equivalent to McDonald's buying up Jack in the Box and franchising the resultant conglomerate.

Medicare Part D, by "privatizing" Medicare, essentially let only certain corporations participate in the market for this huge dollar amount. The few corporations that were allowed to participate used this cash inflow to buy up more of the market share (read: smaller companies).

As far as the Medicare Advantage Plans, you are aware that the costs the government paid for Medicare Advantage was WAY higher than for traditional medicare, right? It was simply a corporate subsidy. I hope it goes away soon - it was NOT successful.

Medicare advantage costs were "12.4 percent greater than the corresponding costs in traditional Medicare—an average increase of $986 per MA plan enrollee, for a total of more than $8.5 billion. Over the five-year period 2004–2008, extra payments to MA plans are estimated to have totaled nearly $33 billion."

Do you really think that is successful? I thought you wanted our government to be fiscally sound?

As far as the requirements of overall coverage, you DO see the reason for that, right? If we require companies to take people with preexisting conditions, we have to make sure that people have coverage all the time - otherwise everyone would wait to get insurance until they were sick. Similarly, the reason coverage of procedures is required is to prevent a huge increase in costs for insurance that covers procedures that are in the public's best interests - say, mammograms for women over 50 or prostate exams, or other screenings. Like colonoscopies, which are now required to be covered.

The ACA had to require that certain procedures are covered is because insurance companies are really bastard coated bastards with bastard filling. They take money and attempt to never pay out. By requiring coverage, this ensures ALL people have those items covered, to prevent insurance switching as well.

If the insurance corporations can't keep up, that's really on them - they are simply middlemen, and all they do is pool money. They don't ACTUALLY provide a service, and instead just skim billions of dollars off of the top. Universal health care simply makes more fiscal sense.

bluegrass wrote on March 27, 2013 at 7:03 pm

With all due respect, you're wrong about Medicare part D, you're wrong about Medicare Advantage Plans, and you're wrong about mandating minimum coverage.  Your insurance company bastard rant shows where your mind is, which is some alternate realm that leaves people who live in the real world unable to communicate with you in any meaningful way.  

Good luck with your non-profit health insurance coop.

sameeker wrote on March 27, 2013 at 9:03 pm

Medicare part D was a givaway to big pharma. When your Bu$h passed it, he insisted that the Secretary of Health and Human Services be barred from negotiating lower drug proces with big pharma. Blame your boy, no Obama.

bluegrass wrote on March 28, 2013 at 10:03 am

A classic, colorful, descriptive example of postmodern drone scribliture.

spangwurfelt wrote on April 02, 2013 at 6:04 am

He also happens to be perfectly right, which is why all you can do is stick your tongue out at his response.

SaintClarence27 wrote on March 28, 2013 at 3:03 pm

The bastard thing was a Scrubs reference, and not serious.

Am I wrong about the numbers? No. You have certainly provided nothing to refute the numbers I provided. You just want huge payouts to corporations by taxpayers. I thought you were a fiscal conservative, but apparently that's not the case. Just admit that you have already made up your mind about medicare part d and medicare advantage, and that no evidence Weill ever change your apparently uninformed decisions.

bluegrass wrote on March 28, 2013 at 4:03 pm

Sorry I missed the Scrubs reference.  Surprising, cause it was one of my favorite shows.  Do you ever say Wrong, Wrong, Wrong, Wrong like the bells to people and no one really gets it? 

Here's what I know about Medicaid Adavantage plans, 14 million people have them now, and they'll soon be illegal.  Your link to that obscure commonwealth website may be right, I don't know, and I'm not going to take the time to figure it out.  It has nothing to do with my point.  Medicare Part D and big pharma and George Bush have nothing to do with my contention that Obamacare is pushing more and more insurers out of the market.  Actually, I'm not sure why you're even arguing with this, since that's exactly what you, that is to say people who favor government controlled healthcare, want to happen.  You want to push insurers out of the market.  It's already happening.  

Streamlining policies and limiting choice does not control health care costs or premiums.  And even though it was a Scrubs reference, I can tell you that the overwhelming majority of insurance companies pay claims they are responsible for.  Yes, there are horror stories here and there, but for the most part private insurance works.  Guess what else, private insurance companies underwrite Medicaid and Medicare by keeping hospitals in business.  Health care facilities as a general rule break even or lose money on state and federal programs.  In addition, the state is about 90 days past due on most payments and dead broke.  Yes, I know Sid will say they have money for Sears, but I'm talking about cash in the account, not pretend money.  So in 2 or 3 years when the Federal government stops paying for the extra 300,000 or so new Medicaid enrollees Obamacare adds to the books, and as private insurance starts to fall away, where is the money going to come from StClarence?  

SaintClarence27 wrote on March 29, 2013 at 8:03 am


(I have done that, actually).

I agree with you that Obamacare is not beneficial to small carriers, and many will get pushed out of the market in favor of large carriers. I was just stating that the transition really hit its stride with the Medicare Part D boondoggle - it's really more of a tangent than an actual argument.

My problem with insurance companies is not that they don't pay claims. They do, although usually after requiring a lot of unnecessary paperwork and phone contact, as well as persistence and knowledge of the system in order to weed out a lot of claims. My problem with insurance companies is that they don't actually provide a service. All they are is middlemen, pooling money and paying out when required, and making a HUGE profit to do so. My problem with insurance companies is that they aren't necessary.

As for the Health Care facilities breaking even or losing money on state and federal programs, that's not *exactly* true. To get that math, you would have to include charity care writeoffs, which are done to maintain tax-exempt status. If you include the tax exempt nature, then it's actually a tidy profit.  As far as state payments, I'm 100% with you. I worked in social services for years, and from my experience they needed to play quite a bit of catch up to *only* be 6 months behind. 

So what I'm saying is this: the ACA is not that great. It's a (small) step forward. Requiring insurance carriers to cover colonoscopies and diagnostic procedures is a good thing. Requiring insurance carriers to take everyone is beneficial to all of society, and to do so requires that everyone carries insurance. But who is going to pay? In reality, we are already paying. I just think it would be simpler and more efficient if we just paid money straight to one source that guaranteed health care for all. And if they did so in a more efficient way, with less administrative cost and without taking a profit, I think that would be helpful to everyone. 

bluegrass wrote on March 30, 2013 at 9:03 am

First you say insurance companies don't provide a service, then you go on to define the service they actually provide.  It's like saying gas stations don't provide a service, they just store the gas from the oil companies until we put it in our cars.  The difference between the government handling this service, and the private sector handling this service, is that private insurance companies are required to have the money to actually pay the claims, whereas the government just pretends to be able to pay the claims.  You said you worked in social work and have seen it first hand, so you know it to be true.  You obviously read the paper and keep up on the news, so you know that the State of IL has a $100 million unfunded liability, in addition to a multi-billion budget deficit, where Medicaid is the top line item in the budget.  And Obamacare is set to push that up even higher by adding an estimated 300K people to the program.  

I understand your point that we are already paying for it, and it is probably not the most efficient way to pay for it.  Believe me I get that, and I tend to agree.  I disagree on Obamacare as a solution.  We are the greatest, most benevolent, richest, strongest nation on the face of the earth, but we are not immune to the simple laws of economics.  


Sid Saltfork wrote on April 01, 2013 at 9:04 am

Aw... The GOP conservative view being expressed by the guy who advocates the theft of the earned pensions of public employees.  "We are the greatest, most benevolent........  simple laws of economics" sounds like a Rick Perry speech.  The problem of the working poor not having access to health insurance is not being addressed by the insurance companies.  However, it is wrong for the government of the people to address the problem according to the conservatives who have health insurance. 

bluegrass wrote on April 01, 2013 at 10:04 am

Sid, your paranoia and constant fear that someone is going to steal your money no matter what the conversation is getting a little scary.  Honestly, I have to wonder if you are being serious, or just doing it for fun at this point, because I'm worried for you.  No one is going to steal your money, Sid.  Also of concern to me is since you don't live in TX, I'm not sure why you're so hung up on Rick Perry.  Maybe you're upset with him because he advocated giving in-state tuition to people who live in TX who are not properly documented.  I know you've been openly against helping out those same people in Illinois at the expense of your own pension and health care, so I thought maybe that's why you're so hung up with him.  Could that be it?  Either way, Rick Perry is not trying to steal your pension money, Sid.  Talk about conspiracy theorist, GHEEZ.  



Sid Saltfork wrote on April 01, 2013 at 12:04 pm

The mention of Rick Perry was to show the similarities between his, and your simple solutions from a conservative viewpoint.  Your correct about my view of providing services to Illinois citizens rather than non-citizens.  You comment regarding Medicaid shows your concern about the increasing cost of Medicaid.  Yet, a "good conservative" like yourself attacks a retired, public service employee, citizen like myself for expressing my view on services to non-citizens.  That is puzzling; but it is consistent with your comments toward public service employees.  I am not concerned with Rick Perry stealing my earned pension.  I am concerned that "good conservatives" such as yourself continue to spin truths to benefit themselves.  The "good conservatives" will say, and do anything to maintain their place at the trough. 

Danno wrote on March 28, 2013 at 7:03 pm

As Pelosi stated some time ago, 'We Must Pass 'It' To Find Out...?...?...See Coming Details After 'It's' Passed....Here we are, squabbling...

Local Yocal wrote on April 01, 2013 at 5:04 am
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Two words: Price gouging, price gouging. See Steven Brill's TIME magazine cover story, "Bitter Pill," for a review of how medical bills are jacked up without protest.

SaintClarence27 wrote on April 01, 2013 at 10:04 am

Scary story.

Sid Saltfork wrote on April 01, 2013 at 2:04 pm

Local Yocal makes a good point about price gouging.  CNN recently reported on the price gouging of surgeries.  The difference in the cost for the same surgery in a geographic area was startling.  No clear explanation was provided by the physicians, and hospitals involved.  The public was advised to shop around prior to a surgery if time, and insurance allowed it.