Skip to comments.The Innovation Tax : How Max Baucus's Health Care Plan will Knife the Medical Devices Industry.
Posted on 09/19/2009 10:12:30 AM PDT by SeekAndFind
Supposedly the Senates version of ObamaCare was written by Finance Chairman Max Baucus, but were beginning to wonder if the true authors were Abbott and Costello. The vaudeville logic of the plan is that Congress will tax health care to subsidize people to buy health care that new taxes and regulation make more expensive.
Look no further than the $40 billion "fee" that Mr. Baucus wants to impose on medical devices and diagnostic equipment. Device manufacturers would pay $4 billion a year in excise taxes, divvied up among them based on U.S. sales. This translates to an annual income tax surcharge anywhere from 10% to 30%, depending on the corporation.
Why $40 billion? No reason in particular, except that Mr. Baucus needs to finance nearly $900 billion in new spending and so he'll grab anything within arm's reach. While there are some exemptions, such as tongue depressors and eyeglasses, most of the devices tax will fall on hundreds of thousands of products that are basic components of modern medicine. Some are routinesurgical equipment, diabetes testing supplieswhile others are cutting-edge technologies, like replacement joints, pacemakers, stents, and MRI and CT scanners.
This new tax will eventually be passed through to patients, increasing health-care costs. It will also harm innovation, taking a big bite out of the research and development that leads to medical advancements. The core of the industry (excluding a few conglomerates like Johnson & Johnson) spent about $9.6 billion on product development in 2007, according to Ernst and Young. The Baucus tax is nearly half that, and also exceeds $3.7 billion, the total venture capital invested in device makers that same year.
Even if consumers will ultimately pay one way or another, this tax also offers an instructive lesson in the perils of industry dealmaking in President Obama's Washington.
(Excerpt) Read more at online.wsj.com ...
I though the task of destroying this industry had been assigned to the malpractice bar. Silly me.
The more one taxes something, the less one will get of it.
Note the perverse nature of the ability of Congress to tax....
According to the article, most of the health-care lobbies decided to negotiate and pay ransoms so Democrats would spare their industries greater harm.
Sure enough, the device maker lobby, AdvaMed, was among the “stakeholders” that joined with Mr. Obama in a Rose Garden ceremony in May and pledged to “save” $2 trillion over 10 years to fund his program.
AdvaMed was nothing if not a team player. It endorsed Democratic inspirations like comparative-effectiveness research and value-based purchasing, despite the danger that under such centralized decision-making the government will decide that the most effective and valuable treatments also happen to be the cheapestrather than those that are best for patients. It also suggested a variety of other taxes that would have resulted in a lower bottom line, much as Big Pharma promised $80 billion in drug discounts and the American Hospital Association agreed to $155 billion in Medicare and Medicaid reimbursement cuts.
But the word on Capitol Hill is that AdvaMed’s tribute wasn’t handsome enough for Mr. Baucus’s tastes. The massive new taxwhich wasn’t a part of any of his policy blueprints released earlier this yearis in part retaliation. Partly, too, the device makers simply don’t have the same political clout as the other big players, making them an easier mark. Old Washington hands are saying the device lobby made a “strategic mistake” by not offering Mr. Baucus more protection money, but the real mistake was trying to buy into the ObamaCare process, instead of trying to defeat its worst ideas outright.
When are these AirHead Congress members going to realize that it’s not the medical industry that needs “fixin’” — it is the LAWYERS who need to be gelded when it comes to Tort Reform.
And the Insurance “fix” which will help many Insurance Companies is to allow them to offer insurance across State lines. There’s a name for that, isn’t there? My brain can’t recall it.
Uh oh, I guess I better hide quickly, or 0bamaCare will be handing me a blue-pill.
We can have the cheapest health care in the world. All we need to do is ban all medical procedures, ban the practice of medicine and shut down the hospitals and the savings in money will be tremendous.../s
May GOD arise quickly and take up his broom to sweep these evil men out of the earth forever!! The name of a righteous man is a sweet memory and brings a smile to the face of all who remembers them, but the name of these wicked men will ROT in INFAMY FOREVER and become a curse and byword to all generations!!
Those ol’boys sure had the words for it didn’t they!