Many of you are probably sick of reading what I have written about the unholy alliance between politicians and public employee unions. Don’t worry, I’m not writing about that again, not now anyway. Today we are talking about a similar problem; about the lack of ethics when it comes to politicians and industry lobbyists. I know, what’s new? This time it involves your health care.
First, I want you to read something you don’t often see in print, but it’s a fact and a primary reason the push to make health care behave like other markets for other things we buy is a dead end when it comes to controlling costs. The following comes from a Bloomberg.com opinion article June 7, 2012.
Then there’s the claim that the levy will be passed to consumers, causing health-care costs to rise and demand for devices to fall. Industry sales will decline by as much as $6.7 billion, the AdvaMed study says. But as any health-care economist will tell you, the medical market doesn’t behave like most other markets. It’s inelastic: When prices go up, demand falls by only a fraction. Mathematica Policy Research has found that only a 2 percent drop in demand results from a 10 percent increase in price. The AdvaMed study, by assuming far higher effects, is off by as much as a factor of 10.
Now to the specific example at hand. The new tax effective January 1 on medical device manufacturers that is part of Obamacare. Needless to say the manufactures don’t like the tax and are lobbying hard to have it repealed as it may well be as both Republicans and Democrats are getting on board.
If you would like to read a good analysis of the claims and counter story about this tax, I urge you to read the full Bloomberg article (and also the comments).
For now let’s just stick to the ethics or lack thereof regarding who supports the repeal of this tax and why.
Repealing the tax would cost almost $30 billion over 10 years and undermine the implicit bargain in the law: In exchange for millions of new customers, health-care companies agreed to fund the cost. Repeal would open the gates to other health sectors seeking to renege on that deal.
The lawmakers most actively pushing repeal are also the ones who are most dependent on the industry’s campaign contributions. They come from California, Indiana, Massachusetts, Minnesota, Pennsylvania and Utah — the states where the device industry has the largest presence.
Campaign filings show that employees of pharmaceutical and health products companies were the single-biggest donors to Representative Erik Paulsen of Minnesota, who is the main sponsor of the repeal measure and whose state is home to Medtronic Inc. and St. Jude Medical Inc. Filings by those working closely with him — Republican Representatives Todd Rokita of Indiana and Brian Bilbray of California, and Democrat Jason Altmire of Pennsylvania — show that health professionals, pharmaceutical manufacturers and health products companies were among their top five sources of campaign money.
In the Senate, Republican Orrin Hatch of Utah, facing a June 26 primary, took in $630,000 from drug and device makers this cycle. Even Elizabeth Warren, the liberal icon who took on Wall Street and is now running for a U.S. Senate seat in Massachusetts, home of Boston Scientific Corp., favors repealing the tax. Health-care providers gave Warren about $102,000, the No. 2 source of her campaign funds.
So there you have it, taking money from funding Obamacare, taking money from medical device companies and in the process selling your integrity.
QUINNSCOMMENTARY 
Citizens covered by Medicare are “over-represented” in the medical device consumer market.
The increased tax collected on medical device manufacturers will be paid to the federal government who in turn, via Medicare, will pay more for the medical device as the price of the device will have been increased to pay for the higher tax.
This seems to me to be a round-about and inefficient way to defray the cost of Medicare services.
There are more direct and efficient plans to reduce Medicare costs.
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Good point.
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