Friday, September 6, 2013

Medical Device Tax Explained

Today, I'm knocking out a few responses to claims made by the left on my recent YouTube video.

The left seems to be clueless on how the Medical Device Tax in Obamacare raises our costs. The government charges the manufacturer a tax on the medical items. Pumps, catheters, medical supplies, walkers, so forth and so on. This increases the cost of the manufacturer to produce these items. Sure, sure, the left argues that it is *ONLY* 2.3% and I've even had a few tell me that it will go away. Is that last statement not the funniest thing you have ever heard? Have you ever known a tax to go away and NOT increase?  And what is 2.3% of a multi-billion dollar industry?

I digress, so this adds an extra 2.3% onto the cost of manufacturing. The manufacturer then passes this cost onto the home health companies and other such distributors of the medical devices being manufactured. These companies then charge the insurance companies more for these medical devices. Where does the insurance company get the money to pay the higher prices for these medical devices? By way of higher premiums, copays, deductibles and out of pocket maximums.

I like to use this example with my kids. You own a business making cookies. You sell your cookies for 5 cents each and your profit is 3 cents per cookie. The government comes along and says you must pay a 2 cent cookie tax on every cookie sold. What do you do? Do you keep the price of your cookies the same and thus only make 1 cent per cookie sold or do you pass the tax along to the consumer by increasing the cost of your cookie to 7 cents each and thus keeping your profit at 3 cents per cookie? It's a no brainer.

I've looked at our EOBs and the insurance company is paying more for the medical supplies than they have in the past. And that's how I know it's Obamacare raising the cost of medical devices!

7 comments:

Anonymous said...

Interesting video Patty. Curious, do you think that healthcare needed reforming at all? You mentioned that your family is insured through your husband's job. What if he lost his job or decided to start his own business? With pre-Obamacare laws you would not be able to get insurance for your children with pre-existing conditions. Don't you have a problem with that? What would you do in that situation?

Pattie Curran said...

Actually, my husband WAS laid off for 9 months prior to getting this job in 2005 and our kids' pre-existing conditions WERE COVERED without a HIPAA letter and without Obamacare. If you actually watched my video, you'd know that. Why do liberals always post anonymously? There were some reforms needed- but NOT Obamacare. Tort reform and freer markets- i.e. allowing insurance companies to compete across state lines.

Pattie Curran said...

Don't you have a problem with my family not being able to afford our kids medical treatments? That's what bothers me about the left. You do not listen, you make rash judgements and fail to look reasonably at the facts. Anonymous liberals really get under my skin. If you thought your argument had merit, you'd at least put a first name.

Anonymous said...

Thank you for responding. I'm not sure why you assume I am a liberal and that I am trying to make any kind of argument. I simply asked you a couple of questions. Of course I do have a problem with you not being able to afford medical treatment! I have a huge problem with it but I don't know how we fix that problem.
Here is my take on things...
#1 - The medical care system is broken and needs fixing. My insurance rates along with medical costs were going up at a spectacular rate well before Obamacare was even proposed.
#2 - I am reserving judgement on Obamacare until it is fully implemented. My recent experience has been bad though. I am self employed and have just learned that my family insurance rates will double (!!!) under this new health insurance exchange system. I thought Obamacare was supposed to spur LOWER costs for individuals not raise them. In fact, I was trying to find an explanation for this online when I stumbled on your video.
#3 - My opinion is that both sides of this issue have an agenda and it's impossible to know who to believe, which is why I'm taking a wait and see approach.
#4 - At least Obamacare is attempting to solve some of the issues that currently exist. Insurance companies denying people with pre-existing conditions certainly is a huge problem and I'm not sure why that wasn't an issue for you. I'm guessing because your case involved children and if it were you that had a pre-existing condition you would not be insurable. A good friend of mine was denied insurance from every insurer he applied to because he had some issues with joint pain in his leg. He's got no health coverage right now.

Another question for you, if you were the president and had a congressional majority under you (ie. you can pass whatever law you wanted), apart from appealing Obamacare, what would you do that would solve the problems with health care? Are you saying tort reform and free markets for insurance is enough to solve everything? It still doesn't answer the pre-existing condition problem.

I did watch your video but I'll watch again. I promise, I don't have an agenda to push and just wanted a friendly conversation on the subject. I'm definitely open to you convincing me that Obamacare is a bust but I'm not there yet.
- Anonymous Joe

Pattie Curran said...

I assumed you were a liberal because the only people I have ever met who like, are reserving judgement on and/or have not seen any ill effects of Obamacare are liberals. And pretty much the only anonymous comments are from liberals. LOL SOrry if I offended you. :) If you and I wanted to open a hospital, we can't. We have to go to the state and get a certificate of need. Who controls that? The government and large hospitals. If people were free to build a hospital on every corner, the costs would come down. The free market would fix much of our ills. Government interferes and costs skyrocket.

Our premiums and costs did increase- but nothing like since the ACA passed. My husband's employer just sent notice that their health plans are going to cost them 7.4 million more in 2014. To prepare us for even higher rates, I am sure. Our local hospital just posted a 51.1 million dollar loss because of implementing the electronics records system required by Obamacare. Because of the loss they are not giving raises. (If you are on Facebook, find my Catholic Tea Party Hippie page- I posted a link to the article there) Our local hospital already laid off 950 people and they STILL had a huge loss. Vanderbilt and other hospitals are laying people off. Quality of care is really going down hill.

If drug companies were able to hold longer patents on their drugs, costs would come down. If Dr. Pepper and Coke can keep their formulas secret, why can't drug companies who spend billions on R&R and clinical trials do the same with their formulas?

Rates are going to increase exponentially next year- we have not gotten notice on how much, but my husbands employer sent notice that their plans are increasing by 7.4 million- I am sure a lot will be passed on to us. The reason I blame Obamacare is because we've had 17 years of chronic illness- my kids have been under anesthesia over 60 times and we have another surgery in a few months..... we know this stuff fairly well. Our deductible increased $10 a year from 2005-2010 -- that's only 50 bucks in 5 years, our OOP Max only increased $500 from 2005-2010 -$100 a year. The deductible has now increased $1,200 in 3 years and our OOP Mac $3,000. What made the previous $10 a year turn into $400/yr and what made the previous $100 a year increase to $1000/yr? It can only be the new law. Our premiums stayed the same from 2009-2010 and since 2010 they have increased $1,528/yr. Again- you can see we had increases... they have just been more extreme increases since ACA passed!

The post office, Social Security Admin, Vetrans Admin, Medicaid and Medicare are not doing well. The DMV... is there any government program that rund better than a private, free market system. Veterans are waiting up to 18 months for treatment and that same government is taking over our healthcare- even with the flaws before Obamacare, our system was better than VA. Obamacare has cut 750 billion (started off at 500 billion) from Medicare- how can we expect to take care of our elderly if we cut that much? Please google "Barbara Wagner" and see what the state of Oregon's medical program did to her. She had cancer return and the state refused the chemo her doctor wanted, but said it would pay for assisted suicide. Barbara died - she appealed twice and lost.

Pattie Curran said...

Part 2- couldn't post it all in one comment: I don't think Obamacare attempted to fix the medical system. Obamacare is insurance reform and not healthcare reform. It regulates insurance and tells insurers what is and is not covered. Unelected officials will be writing the regulation- so when we are not pleased with it, we cannot fire them. It needs to go.

Yes, I would repeal Obamacare and put into place common sense reforms that opened the free market up. I truly believe that captialism and the free market are what made the American healthcare system great- we did not have our insurance tied to our employers until the government set wage controls in the 40s and 50s. Then, to get around the wage controls, companies started offering benefits packages. Insurance because what it is today because of government intervention.

Anonymous said...

Thank you for the well written response Pattie. I totally agree that having health insurance tied to employment is a horrible system but I guess we're stuck with it. Unlike you I don't have much experience in dealing with the medical establishment and I will just have to wait and see how this effects people that I know in the coming years. I am personally not ready to fight to repeal something that is still a work in progress. Good luck to you and your family.

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