Tag Archives: Government Regulation

Senate Democrats contemplating new $40 billion tax on health care innovation

TigerHawk has a post about a tax being considered for medical device companies. (H/T Lex Communis)

Excerpt:

As we have long predicted on this blog, the health care “reformers” propose to finance at least part of the “savings” or new benefits — it is impossible to know which — by decreasing the rate of return on medical technology. There are many ways in which this might be done, but the Senate Democrats are proposing to do so directly, by levying a “value added tax” on medical device companies according to their proportion of U.S. sales. This tax would be without regard to profitability, so it would amount to a capital tax on start-ups and a massive income tax surcharge on profitable companies, varying as net margins do. In the case of my own mid-sized company, the tax would be the equivalent of a roughly 20% surcharge on our net income (in all likelihood raising our economic tax rate well above 50%) or 50% of our research and development budget, depending on how you want to look at it.

Any way you look at it, the proposed tax is a calculated effort to divert capital from the medical technology industry to other uses in the economy, because new medical technology drives costs that are now going to be assumed by the government (or at least will be if the Senate leadership gets its way). Of course, innovative medtech also extends and saves lives, and makes them more comfortable and more productive. Which is, after all, the point of medicine.

Know what would be great? If a bunch of silver-spoon bureaucrats invented something that might actually save lives instead of meddling in the financial affairs of medical innovators.

Some of the companies that would be affected are listed in this Wall Street Journal article.

An analysis of the Democrats socialist health care policies

I would summarize the ideals of Democrats (socialists) as follows:

  1. There are unequal life outcomes in society
  2. Those who have little wealth are the victims of those who produce wealth
  3. We (democrats) must transfer wealth until everyone’s life outcomes are equal, regardless of their life choices
  4. We (democrats) must use government coercion to achieve this equality
  5. Since we (democrats) are so morally superior, we are not obligated to transfer our own wealth to anyone

Consider health care. Some risky lifestyle choices are more likely to require more health care services. The socialist’s goal is to make sure that no one is deterred from making these risky choices. Those who do not engage in these risks must be forced to pay for the health care of those who do choose to take on these risks. That way, everyone is equal in the end.

The way this is done is to make sure that people who don’t engage in risky behaviors cannot pay less for their health care than those who do engage in risky behaviors. Let me explain.

Suppose a safe person S knows that he only needs coverage for catastrophic care, since his lifestyle choices eliminate the need for elective treatments like abortions, birth control, STD medications, sex changes and drug addiction treatments. He can be covered for a very low premium.

Consider another irresponsible, risky person R who is engaged in all kinds of risky behavior. He can be covered for all of the medical services for a very high premium. His own choices expose him to risks that will require more medical services.

Democrats (socialists), solve this problem by forcing S to pay for mandatory health care with a very high premium that covers services he will never use. That way, he is really paying for his own health care, and R’s health care, too.

Take a look at this article I found on Health Care BS. In the article, they cite Michael Tanner of the Cato Institute, who analyzes the health care policies that may be included in the Democrats’ health care reform bill.

This is the one I want to draw your attention to, because this is what single-payer countries like Canada have that causes them so many problems:

An Individual Mandate. Every American will be required to buy an insurance policy that meets certain government requirements.  Even individuals who are currently insured — and happy with their insurance — will have to switch to insurance that meets the government’s definition of acceptable insurance, even if that insurance is more expensive or contains benefits that they do not want or need.

And here is another one that will force employers to lay off American workers because employers have to pay more for the same productivity.

An Employer Mandate. At a time of rising unemployment, the government will raise the cost of hiring workers by requiring all employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.

Yes, that’s right. Socialism attacks businesses. Attacking businesses causes unemployment.

And there’s more:

A Government-Run Plan, competing with private insurance.  Because such a plan is subsidized by taxpayers, it will have an unfair advantage, allowing it to squeeze out private insurance.  In addition, because government insurance plans traditionally under-reimburse providers, such costs are shifted to private insurance plans, driving up their premiums and making them even less competitive. The actuarial firm Lewin Associates estimates that, depending on how premiums, benefits, reimbursement rates, and subsidies were structured, as many as 118.5 million would shift from private to public coverage.   That would mean a nearly 60 percent reduction in the number of Americans with private insurance.  It is unlikely that any significant private insurance market could continue to exist under such circumstances, putting us on the road to a single-payer system.

When government controls your health care, you pay them at gunpoint and when you want care you get in line behind people who paid nothing into the system. That is socialized medicine, the dream of all Democratic socialists.

And there’s also redistribution of wealth:

Massive New Subsidies. This includes not just subsidies to help low-income people buy insurance, but expansions of government programs such as Medicaid and Medicare.

And remember what I said about the government needing to reducing costs when demand skyrockets for “free” care?

Government Playing Doctor.   Democrats agree that one goal of their reform plan is to push for “less use of aggressive treatments that raise costs but do not result in better outcomes.”  While no mechanism has yet been spelled out, it seems likely that the plan will use government-sponsored comparative effectiveness research to impose cost-effectiveness guidelines on medical care, initially in government programs, but eventually extending such restrictions to private insurance.

This is all caused by the good intentions of people who have no knowledge of economics, whatsoever. And it is important to note that it is this kind of naive, incompetent meddling in the free-market that leads to poverty and the loss of all of our liberties.

Further study

Here are some previous links that are relevant:

Obama’s cap-and-trade plan is a carbon tax that hurts consumers

House Republican Leader John Boehner
House Republican Leader John Boehner

John Boehner’s blog, notes that his concerns about Obama’s cap and trade bill are now being echoed in the mainstream media.

Investor’s Business Daily explains:

Tax-challenged Treasury Secretary Timothy Geithner and White House Budget Director Peter Orszag went to Capitol Hill on Tuesday to defend a federal budget that assumes $650 billion in revenue from a cap-and-trade carbon emissions scheme…

“The president’s budget increases taxes on every American, and does so during a recession,” pointed out Rep. Dave Camp, R-Mich., ranking member on Ways and Means. “And that means higher prices for Americans for food, for gas, for electricity, and in a state like Michigan for home heating — pretty much everything they buy.”

This carbon tax will be paid by energy companies, manufacturers and public utilities and will be passed on to consumers. Camp’s Michigan gets 60% of its electricity from coal. But Obama’s plan has always been to make fossil fuels so expensive that boondoggles like wind and solar suddenly look competitive.

The article concludes:

Obama’s cap-and-trade budget is a recipe for permanent recession. An analysis by the George C. Marshall Institute estimates GDP losses of as much as 3% in 2015 and as much as 10% in 2050 as a result of this measure.

The Detroit News reports that:

President Barack Obama’s proposed cap-and-trade system on greenhouse gas emissions is a giant economic dagger aimed at the nation’s heartland — particularly Michigan. It is a multibillion-dollar tax hike on everything that Michigan does, including making things, driving cars and burning coal.

Let me be clear. Obama intends to raise taxes on energy producers. These energy producers will pass these tax hikes onto consumers. If the prices rise too high, Obama may fix prices lower which would cause a shortage. A shortage would potentially cause gas lines and power rationing. If things get worse, it could lead to the nationalizing of the energy producing companies.

UPDATE: On John Lott’s blog, he links to this Reuters story in which Hillary Clinton tells the European Parliament: “Never waste a good crisis … Don’t waste it when it can have a very positive impact on climate change and energy security”. This quotation echoes Rahm Emanuel: “Never Allow a Crisis to Go to Waste”. This might explain why Democrats are so bold about having government take control of the free market.