Repeal the medical device tax?

If you’re like me and live in a red state or district you’ve probably been appealed to by conservative (and even some liberal) politicians on the effort to repeal the 2.3 percent medical device excise tax in the Affordable Care Act. The advocacy probably came packaged like the cookie-cutter rhetoric that my congressional representative released in February:

“At a time when unemployment is stagnating around 8 percent, we cannot afford to stifle innovation and growth in one of our nation’s most advancing sectors – the medical device industry.  This job killing tax has already caused companies here in Indiana, like Cook Medical Group, to put plans to expand their operation and create new jobs on hold.”

Yet there is a compelling case to keep the tax written by Michael Hiltzik in the Los Angeles Times (h/t Kevin Outterson), who argues among other things that there’s no impartial reason to believe anything about the above quote is true (emphasis mine):

The medical device industry talks as though it’s uniquely burdened by its share of these trade-offs. Its pitch is that the tax will destroy innovation in the industry, put small companies out of business, send thousands of jobs overseas and drive up costs for consumers. “This very targeted excise tax is going to lead to bad outcomes across the board,” says JC Scott, the government affairs executive at the Advanced Medical Technology Assn., or AdvaMed.

Yet AdvaMed’s claims have been subjected to outside analysis and found wanting. AdvaMed’s claim that the excise tax would drive employment abroad is based on an analysis it commissioned from Diana and Harold Furchtgott-Roth, two free-market economists who assert rather than document the employment effect, and none too vigorously, at that. “Some manufacturing … may shift offshore as a result of the new excise tax to minimize losses,” they write, wanly.

Yet the logic here is questionable, since the tax is imposed on sales of devices in the U.S. no matter where they’re produced, and devices produced in the U.S. are exempt if they’re sold abroad. The authors’ suggestion that companies might move jobs overseas to make foreign sales more profitable overlooks one over-arching fact about the medical device market: It’s hugely dominated by the United States.

[...] The industry can’t cite a single objective study that supports its contentions that the tax will suppress innovation in the field and make U.S. manufacturers globally uncompetitive.

Hiltzik adds that inandof itself this doesn’t invalidate their objections (I would disagree), but “that if you ever found a study from any of them endorsing a tax of almost any variety, you could be forgiven for fainting dead away.”

In other words, beware politicians using industry-financed tax studies written by sympathetic researchers who happen to oppose any form of taxation. In political eras gone by this story could have been viewed as a simple case of politicians kowtowing to special interests — in my Representative’s case the medical device industry is quite active in the state. Of course one person’s “catering to lobbyists” is another’s “protecting the interests of constituents.” In principle it’s possible for both to be true — generally I tend to think such charges are often so vacuous as to be useless — but in this situation the former strikes me as far more likely.

The broader assertion from Hiltzik is that the medical device industry is occupying a poor position of explaining why they should be exempt from the law while offering no alternatives to the deficit-reducing tax they want repealed. That’s a good angle so much as it goes, but the big picture context of this particular debate is that several tradeoffs were made so that healthcare reform wouldn’t add to the federal deficit. For instance, hospitals and some physicians will see reduced future increases in reimbursements that help offset the cost of providing subsidies in the state-based insurance exchanges and expanding Medicaid. The industry groups representing them were largely okay with this because the legislation is going to vastly increase their customer base; in effect the tradeoff from their standpoint works out to a net-plus. The medical device industry is to going to essentially see the same benefits and greatly profit from an ACA-induced growth in usage of their products, yet are pretending that a 2.3 percent tax is a proverbial Sword of Damocles on their business. Given the lack of any objective proof that this is the case I’d say the industry is crying wolf and the tax should stay.

Biblical Condemnation For Thee, But Not For Me

#headdesk: Noun. 1. Slamming your head into your desk at the stupidity of another.

Yesterday Aviva Shen at ThinkProgress highlighted rhetoric from Tennessee congressman Stephen Fincher (R) at last week’s House Agricultural Committee debate on cutting SNAP benefits in the impending farm bill. His sentiments were ensconced within a broader denunciation of the government stealing “other people’s money;” in this instance as a matter of providing nutrition assistance to millions of Americans. Fincher defended his position by asserting biblically grounded reasoning (emphasis mine):

Fincher invoked the Bible in his defense of the devastating cuts, quoting, “The one who is unwilling to work shall not eat.”

As Shen goes on to note, Fincher fails to find a similar case for condemning himself for receiving millions in farm subsidies over from 1999 to 2012, including a whopping $70,000 direct check for doing…well, nothing.

This general story isn’t new (see this post), but here is why Fincher deserves the ignominious hashtag of headesk, in three charts:

1. The people Fincher characterizes as undeserving of food because they’re unwilling to work are mostly children, the elderly and disabled:

2. Most of those households who are working age and not disabled actually work during the month they received SNAP benefits, and the vast majority are employed within year:

3. Finally, the number of households working while participating in SNAP has sharply increased:

If Fincher wants to advocate low-income child labor in order to prevent statist theft he’s certainly welcome to make that case. If Fincher wants the elderly to leave retirement because their dependency on SNAP is offensive to his faith then he should be writing Slate-pitchy op-eds in The Tennesseean. If Fincher believes there is a policy distinction between his willingness to work as a farmer and other’s willingness to work low-wage jobs then he should explain why the former deserves public redistribution and latter deserves nothing.

I could go on but the onus is on Fincher and other similarly-minded folks to explain why ‘working poor,’ ‘disabled,’ ‘elderly,’ and ‘minor’ are statuses that necessarily exclude getting other people’s stolen money but public assistance or tax exclusions for farmers, bankers, and corporations are designations that escape such biblical condemnation.

Back to the (Obamacare) Future?

“Selling Elderly on Medicare Is Not Easy” is the headline to an article written March 3, 1996. There’s more in this great Sarah Kliff retrospective about the lead up to what was termed “M-Day,” highlighting the great uncertainly over what would happen post-Medicare implementation. One of the newspaper clippings included in the piece:

From the Kliff article:

“What will happen then, on that summer day when the federally insured system of paying hospital bills becomes reality?” Nona Brown, a New York Times reporter, wondered in a story published April 23, 1966. “Will there be lines of old folks at hospital doors, with no rooms to put them in, too few doctors and nurses and technicians to care for them?”

Seem familiar? Yet forty-seven years later these and other outcries from the past register little more than chuckles and head shaking. The past is no guarantee of the future, of course, but it’s worth keeping in mind some of the arguments and worries we’ve faced when big changes occur. Some of the same fears persist, but if hindsight is unkind to rhetoric surrounding Medicare it’s not unreasonable to expect the same for the Affordable Care Act.

This does make me wonder, though, about the kind of future laughs we could get from similarly written headlines today. Maybe something like “Selling Uninsured on Obamacare Is Not Easy,” or “Selling Chronic Health Sufferers on Pre-Existing Protections Is Not Easy.” My favorite, posted on Twitter:

 

“Selling Market-Based Healthcare Reform to Conservatives is Not Easy” #backtotheACAfuture

— David Phillippe (@ddoublep) May 17, 2013

 

Any other good suggestions?

Another wacky deflating bar-flailing federal deficit graph!

Mostly unremarked upon outside the wonkosphere this week was the near-term deficit crisis being solved. Amidst the scandals rocking the nation to the core, perhaps it isn’t a surprise. To be honest, in a contrarian sort of way, this shouldn’t be news outside the fact that the polity has been extremely focused on (non-existant) ballooning federal deficits. Which is to say, the report released by the Congressional Budget Office (CBO) shaving off 200 billion dollars from the expected 2013 budget deficit is more of a trend than revelation — see this post from last Thanksgiving. Now, this, from the CBO (PDF):

See also: Krugman, Yglesias, Klein, Drum, etc.

As it turns out a mixture of spending cuts and tax increases reduces the deficit! Of course it’s probably (no, more like definitely) cold comfort to the erstwhile victims of austerity. Now I can eagerly await the giant policy apparatus turning it’s legislative guns to deal the long-term unemployed, right?

This Is Your Economy on Austerity

The Grey Lady has a piece on economists warning the efforts to reduce the deficit are slowing the recovery. They included these brutal graphs:

My two-cents over at the McLean Parlor.

Hospital prices and giving the uninsured the status quo

In non-Oregon related news the health corner of the blogosphere is abuzz over the government releasing an absurd number of Excel lines detailing the sticker-price hospitals charge for common procedures. Sarah Kliff reports (emphasis mine):

Until now, these charges have been closely held by facilities that see a competitive advantage in shielding their fees from competitors. What the numbers reveal is a health-care system with tremendous, seemingly random variation in the costs of services.

[...]

Experts attribute the disparities to a health system that can set prices with impunity because consumers rarely see them — and rarely shop for discounts. Although the government has collected this information for years, it was housed in a bulky database that researchers had to pay to access.

The hospital charges being released Wednesday — all from 2011 — show the hospitals’ average list prices. Adding another layer of opacity, Medicare and private insurance companies typically negotiate lower charges with hospitals. But the data shed light on fees that the uninsured could pay.

That last bit is the important part. As Yglesias notes these are just the sticker-prices, or what most people don’t pay. It’s effectively the starting point for hospitals negotiating with insurance companies and the government. Price transparency in the healthcare sector is somewhat of a capture the flag-post for free-market types, economists and others who envision a market not unlike shopping for Sunday brunch specials. Information like this inevitable adds fuel to that fire for sure.

Yet it’s also worth pointing out that the Affordable Care Act attempts to remove the most pernicious part of this picture; the occasionally hosed individual without insurance. People of all political stripes should probably agree on this: the uninsured shouldn’t have to gamble on the relevant folks having a case of the Mondays in deciding whether or not they get charity care. While hospitals are quick to say that even the uninsured may not pay the cover charge it still remains (unacceptably, in my view) a discretionary device of sorts.  The ACA, in short, tries to remove that arbitrariness by putting those folks in the same bargaining framework as everyone else.

For all the talk of Obamacare making things more complex in an already opaque system of healthcare, most of the insured like their coverage more or less as it exists. The parts they don’t like are being addressed to some extent in the reforms already enacted and those to come in 2014. The end-product won’t be perfect, or even ideal in the Weberian sense, but it will be truer to the idea that most prefer covered by the not-perfect status quo relative to nothing.

The ACA’s part-time conundrum

From Sarah Kliff at Wonkblog:

This isn’t an issue specific to Indiana: From movie theater chains to state governments, there is a lot of debate over how large businesses will react to the requirement to provide insurance to full-time employees who work more than 30 hours a week.

The health care law requires companies with 50 or more employees to provide affordable insurance coverage to workers. For part-time employees, who work fewer than 30 hours, the story is different: A company does not get penalized for not providing health insurance coverage.

Of course it’s a little more complicated than that; firms must have fifty plus one full-time, non-seasonal, workers to incur the penalty portion of the Affordable Care Act. Despite scattered stories of employers cutting hours, no one really knows the extent to which companies will respond.

Still. There is a relatively straight-forward logic accompanying the decision to grow your part-time workforce in response. Of course that has consequences as well, something rarely kept in mind by ACA detractors (though Kliff covers it). There’s also a compelling logic to not avoid the penalty and simply have a more well-rounded semi-professional employee base with better health benefits.

Folks assumes the worst, perhaps typifying non-partisan populist cynicism surrounding business; that firms will make their employees bear the burden for such restrictions. Yet somehow that remains a indictment of the legislation for many rather than the companies themselves. I’m mystified that some assign such innocent reverence for the inevitable logic of firm reactions and not for the logic of elected officials pursuing their ideological priors.

Anyway, assuming the worst case scenario and Wal-Mart and McD’s and others vastly increase their part-time workforce, does that make the ACA an unintended job’s bill?