Health industry stakeholders focus on pain, not gain

Oct 30 2009

Businesses, including medical device makers, insurers and pharmaceutical companies are bracing for tax and fee provisions in the House health care reform bill.

The Associated Press: "The health care overhaul bill produced by House Democrats would impose an array of new taxes, fees and government mandates on major players in the health industry, including insurers, doctors and drugs and medical devices makers. ... "The House added $20 billion in taxes on sales of medical devices like artificial hips and heart stents ... but it's a substantial reprieve from an earlier plan in the Senate to slap a $40 billion fee on medical device makers" (Hirschfeld Davis, 10/30).

Reuters: "And while (lawmakers) also want to close the gap in drug coverage for elderly and disabled Medicare patients -- a move that could get more people to take their medications -- House leaders would require the nation's health secretary to negotiate lower drug prices under the program." Insurers too would be forced to spend 85 percent of premiums on actual costs to insure, which would limit the ability to pay bonuses, and would require rebates if less than that 85 percent is spent on health care (Heavey and Richwine, 10/29).

The Hill reports that health insurers and drug manufacturers said the bill "would drive up costs for seniors and companies alike. … A coalition of big-business groups, including the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers, issued a letter opposing the House bill outright" (Young, 10/29).

The Wall Street Journal: "The drug industry took a big hit in the House bill. For elderly people who are eligible for both Medicare and Medicaid, the bill mandates rebates from the drug makers so that the Medicare system ends up paying less. Those rebates are estimated to cost the industry $60 billion over a decade." The WSJ notes that the bill "gives brand-name-drug companies sales exclusivity for 12 years and allows them to extend it with minor tweaks to their formulas" (Mundy, 10/30).

A 5.4 percent surtax on the wealthiest earners in America — those who make $500,000 by themselves or $1 million with a spouse — isn't indexed to inflation, meaning the rolls of those who pay the tax will likely increase each year, CQ Politics reports. Congress must routinely pass "patches" to stop something similar from happening in the alternative minimum tax (10/29). 

Finally, The Washington Times breaks the bill down by the numbers: 214 mentions of the word "tax" and 42 studies: "Rep. Mike Pence, Indiana Republican, said the bill uses the word 'shall' 3,425 times, which he said was an indication that a lot of new mandates are being imposed. Among them is a requirement that chain restaurants print directly on their menus how many calories each item contains" (10/30).