Saturday, October 24, 2009

The Senate Finance Committee’s proposed device tax

---is part of the Senate health care bill.

After explaining how it works Dick Morris notes:

The result will be that virtually every piece of advanced surgical equipment will be subject to a price increase to meet the levy from Washington. No matter that these devices often make the difference between life and death and that, in effect, taxing them raises the cost of vital treatments. The vengeful White House will have its pound of flesh from the medical device industry for daring to be independent and to refuse to knuckle down to administration pressure.

This tax, imposed in a spirit of haughty arrogance, falls on totally inappropriate objects. Valves, prosthetic limbs, pacemakers, hearing aids and such are essential therapies that make life longer, better and less painful. To tax them makes no sense. Except in the world of sharp elbows and interest group politics that grips this take-no-prisoners and show-no-mercy White House.

Dr. Wes adds:

Part of the reason the device industry did not capitulate on the price consessions was that hospitals are already pressuring device companies to lower their prices. Despite their best efforts, medical device companies will continue to feel the pinch from increasingly capitated payments to "Accountable Care Organizations" (aka, big lumbering hospital systems serving as HMO's), we'll see the gradual erosion of medical innovation in favor of business survival, especially for those who don't "play nice" with reform efforts underway.

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