Obamacare, Business,  and the Law of Unintended Consequences

All of this is now threatened by the only law that is guaranteed to pass in Washington: the law of unintended consequences.

Evan Bayh,  Democrat,  Former Governor and Senator from Indiana,  “Obamacare’s Tax Raid on Medical Devices, “ Wall Street Journal, September 27, 2012

September 28, 2012 -  There used to be game show called “Truth or Consequences.”   If you believe the truth  unintended consequences are at work in  the health care law, passed by Congress.  Even the bulk of the law does not kick in until 2014, the present  consequences include:

·         Raising costs of family coverage by $2500 instead of lowering costs by $2500 as promised.

·        Motivating  employers to postpone hiring until they have a clear picture of the economic consequences of Obamacare.

 

·         Creating incentives for at least 10% of employers to drop coverage as a less expensive alternative than paying the penalty for not offering coverage. 

·         Leading many large employers and insurers to change coverage to  voucher-type system where workers are given a set amount to money and told to shop for the best deal.

·         Driving private practitioners, who are essentially small businessmen, into the arms of hospital employers, because the doctors can no longer afford to care for Medicare and Medicaid patients.

 

·         Exacerbating the physician shortage by causing at least half of physicians to leave practice for other alternatives – retiring, concierge medicine,  cash-only practices, locum tenens, or nonclinical positions.

·         Burdening taxpayers with more than $510 billion in new taxes directly or indirectly related to Obamacare

• Antagonizing small and large businesses through heavy regulations and increased costs of doing business and offering health insurance to emplpyees, which is why the Chamber of Commerce, The National Federation of Independent Businesses, and other business organizations oppose Obamacare.

·         Taxing the medical device industry with a 2.3% tax on sales of devices, which amounts to a 15% tax on profits.

Of the medical device tax, Evan Bayh, former Democratic Senator from Indiana,  has this to say:

“The Supreme Court decision in June upholding the Affordable Care Act leaves in place a tax on medical devices that threatens thousands of American jobs and our global competitiveness. It will also stifle critical medical innovation in the industry that gave us defibrillators, pacemakers, artificial joints, stents, chemotherapy delivery systems and almost every device we depend on to save lives.”

“The 2.3% tax will be charged to manufacturers on each sale and takes effect in January. Many U.S. device companies, in response, have already announced layoffs, canceled plans for domestic expansion and slashed research-and-development budgets. This month, Welch Allyn—a maker of stethoscopes and blood-pressure cuffs—announced that it will lay off 10% of its global workforce over the next three years, but all of the jobs being cut are in the U.S.”

“The medical-device industry has been a great American success story. More than 400,000 U.S. workers are employed in this sector directly, and another two million, including those involved in supply and distribution, benefit indirectly. At a time when the economy struggles to produce good jobs, medical-device positions pay well. Average compensation is $58,188 annually compared with a national average of $41,673 annually for all employment, a 2010 Pew Foundation report found.”

“Especially hard hit could be the hundreds of small companies developing medical software applications. These apps promise to revolutionize the practice of medicine—for instance, by delivering blood-sugar test results for diabetics. The IRS is deciding now whether to treat apps as medical devices subject to the tax.”

“The adverse effect of this confiscatory level of taxation on traditional device makers is already clear. In my state of Indiana alone, Cook Medical has canceled plans to build one new U.S. facility annually in each of the next several years, and Zimmer plans to lay off 450 workers, while Hill-Rom expects to lay off 200. Stryker, based in Michigan, anticipates having to lay off 1,000 workers.”

Tweet:   Obamacare and  regulations and taxes it imposes threatens  vitality, innovation,  and profitability of businesses and medical pratices.