During the recent debt ceiling debacle in Congress, Tea Partyers were demanding that the medical device tax in the Affordable Care Act be eliminated. This is yet another example of politicians trying to sell a bill of goods to the American people in the guise of shrinking government and lowering our debt. The truth is, in fact, quite the opposite. The medical-device industry waged an intense lobbying campaign –– spending more than $50 million — even garnering the support of many Democrats who favored the law — arguing that the tax would stifle innovation and increase health care costs.
The medical-device industry faces virtually no price competition. Because of confidentiality agreements that manufacturers require hospitals to sign, the prices of the devices are cloaked in secrecy. This lack of transparency impedes hospitals from sharing price information and thus knowing whether they are getting a good deal.
Even worse, manufacturers often maintain personal relationships (sometimes involving financial payments like consulting fees) with physicians who choose the medical devices that their hospitals purchase, creating a conflict of interest. Physicians often don’t even know the costs of the devices, and individual physicians often choose devices on their own, which weakens a hospital’s ability to bargain for volume discounts.
Such anticompetitive practices obviously contribute to higher prices in general. For example, the Government Accountability Office (GAO) found that prices for cardiac implantable medical devices in the United States vary by several thousand dollars. And even the lowest-priced devices in the United States are expensive compared with those in other developed countries. According to the consulting firm McKinsey & Company, the United States spends about 50 percent more than expected on the top five medical devices, compared with Europe and Japan. McKinsey calculates that this amounts to $26 billion in excessive spending each year.Medicare, private health insurers and patients end up paying these inflated prices.
Excessive prices fuel enormous profits — profits that dwarf both the medical-device tax and the industry’s investments in research and development. Consider the device division of Johnson & Johnson, which in 2012 had an operating profit of $7.2 billion. By the company’s own estimate, the device tax would amount to at most $300 million, and its investment in research and development amounts to only $1.7 billion.
There are several ways policy makers could lower device costs. The first step would be to end the anticompetitive practices that prevent hospitals from getting the best deals.
Currently, medical-device manufacturers allocate only a sliver of profits to research and development and often focus on “tweaks” to existing devices, without providing any evidence that they are of better quality. Competitive pressures from public and private payers would provide incentives for the industry to become more innovative, producing technologies that actually lowered costs and offered truly advanced breakthroughs.
Instead of using its clout to lobby against the device tax — which helped foment opposition to the Affordable Care Act — the medical-device industry needs to share the responsibility of lowering costs for patients, businesses and taxpayers.
While it is true that we have added a little under $5 trillion to the debt since Obama took office, it is important (and fair) to remember that most of the massive spending policies implemented by the previous administration did NOT cease to exist the day Obama was inaugurated. The wars, the ridiculous tax cuts for the wealthiest Americans, Medicare Part D (boondoggle for Big Pharma) all continue to contribute to the debt to this day, while adding to the amount of interest that has to be paid on the debt.
The fact is, as a percentage of GDP, new spending by the Obama administration is actually lower than it has been since World War II — lower than the rate of inflation for the past two years. Obama’s actual “new” spending has amounted to about $900 billion over the last 3 years. This, despite the fact that government spending routinely goes up during economic downturns regardless of who is in the White House because more people have to depend on unemployment benefits, welfare, food stamps and Medicaid in order to survive.
According to CNN.Money, it has now been determined that more jobs have been created since the economy tanked than were lost. Obama has managed to achieve this net gain in jobs since 2009, despite having to deal with the lowest rated, least productive and most obstructive Congress since the Civil War, not to mention the fact that this country lost more than 50,000 factories between 2000 and 2009.
Mitt Romey’s and Paul Ryan’s plan would cut taxes 20% and allegedly keep those cuts “revenue neutral” by eliminating loopholes and certain deductions which they have both refused to identify. Most economists agree that their tax cuts would cost about $5 trillion over the next 10 years, and they also agree that eliminating every single loophole and write-off would NOT pay for them. In other words, they are making stuff up as they go along, refusing to provide any details because those details would expose the problems with their ideas.
Romney and Ryan also say that they want to “widen the tax base”. There is only one way to interpret this: they want families to start paying federal income tax who have, until now, made too little money to pay any federal income tax. So, according to Romney and Ryan, low income families would be subject to paying taxes they’ve never had to pay before, while the wealthy would get an average of a $250,000/year tax cut.
Obama 2012 –– Because the alternative is UNTHINKABLE!
Four years ago, this country was on the precipice of a second Great Depression. That’s an economic state where more than a quarter of the population is unemployed, half of all businesses close their doors, banks stop lending, and the government has to go into massive debt to keep the population from starving. It is a time when the majority of the country has to do without basic necessities. The only thing that got us out of the Great Depression was government spending on World War II.
Fortunately, the second Great Depression didn’t happen. In fact, less than three years after the recession bottomed out in 2009, the country has had a net gain in jobs relative to the jobs that had been lost. We have had 32 straight months of job growth in the private sector. The DOW has more than doubled, which has been good news to anyone with a 401K. We did NOT have to turn our auto industry over to foreign manufacturers two years ago, which saved more than a million jobs. Our exports are near record levels and we are less dependent on foreign oil than in the last 20 years. Home prices are finally headed up again. In Los Angeles, home values posted their highest gains in more than 6 years. Taxes have actually gone down since Obama took office, and more than 30 million people now have medical insurance who couldn’t get it before.
By any measure, the economy is trending upward.
Has it been fast enough? Of course not. You don’t recover from the loss of more than 50,000 factories (between 2000 and 2009) in just 3 years. New industries have to be generated. More people need new training for those jobs. It requires a national investment. The problem is, we now have the lowest rated, least productive, most obstructive Congress since the Civil War, whose primary objective has been to ensure that nothing President Obama proposes or supports passes or is adequately funded. It is politics of self-destruction.
Obama’s and Biden’s economic plan has been simple enough to grasp for anybody who has bothered to pay attention. The American Jobs Act was a great bill that would have been paid for while creating 3 million jobs. Guess who blocked it.
Undecided voters have no excuse. And no option.
Obama 2012 –– Because the alternative is UNTHINKABLE.
It was a pleasant dream, but still just a dream. That members of the House and Senate would work together, setting aside their ideologies and petty projects so they could do what was right for the country instead of voting along party lines or pandering to local constituencies and friendly lobbyists. When Judd Gregg withdrew his name from the nomination for Commerce Secretary, it signaled the GOP’s absolute unwillingness to work with anybody who has an opposing point of view. He didn’t withdraw because he suddenly realized that he and President Obama have different economic philosophies. Obama has talked openly about the need for a big stimulus package since long before January 20th. After having pursued the job by querying Obama staffers about a position in the Cabinet, he pulled out because he was being leaned on by the RNC, which smells blood in the water. Its own blood. Gregg turned down a big pay-raise and a prestigious seat in the Presidential Cabinet because he was being treated like a traitor and threatened by his fellow Republicans. The man is a coelenterate. The Party has no conscience.
The Republican Party is in the process of forming a circular firing squad. Unfortunately, the middle class is sitting right in the middle of that cross-fire. Nobel Prize-winning economists were lining up to support the stimulus package, with some even saying it was too small, yet the GOP financial wizards who were responsible for getting us into this debacle were predicting the doom of capitalism and rise of socialism if the bill was signed into law. These are many of the same people who supported Phil Graham’s legislation back in 1999 which all but eliminated any regulation of the banking industry. These were the same “free marketers” who insisted that corporations would always do the right thing. Then ENRON collapsed. These are the intellectual giants who presided over a national debt that went from a billion dollar surplus to trillions of dollars in the red in a matter of six short years. Did a few democrats enable some of that behavior? Of course, but the fiscal policies of the Bush Administration and the anti-regulation ideology of the Republican Party built the foundation of sand upon which our economy was expanding.
Hopefully, Obama has learned a sad, yet important lesson in the last month. He must realize by now that the Republican party is driven exclusively by ideology, rather than by pragmatic reasoning. When he hears United States senators apologizing to a radio talkshow host for criticizing his “I hope Obama fails” remark, Obama must know that he is dealing with people who are bent on obstructing anything that he tries to do, regardless of how much damage it might to do the country. He’s dealing with ideologues who think that tax cuts alone will save the economy from catastrophe, even though a study of the last tax cut showed that it had no measurable impact on the economy. He’s dealing with people who led the charge for last year’s government hand-out, which failed to do anything for the people who received those checks in the mail. He’s dealing with people who are looking for their next campaign slogan, rather than useful solutions to the terrible problems we face.
Obama will always be a civil negotiator. That’s his nature. He appears to be a guy who rarely if ever loses his cool. But he needs to take the gloves off and make it clear to the American people what he is dealing with on Capitol Hill. Between now and 2012, the GOP’s circular firing squad will lock and load, and the Republican Party will, for all intents and purposes, cease to exist as a viable national party. We can only hope that it won’t succeed in taking the middle class with it.