Sunday, January 27, 2013

Still Not Getting that Free Market Thing

James Taranto in the WSJ, Tax That Fellow Behind That Tree:

One of the many ObamaCare provisions to take effect at the beginning of this year is a 2.3% tax on medical devices. Novation, a company that purchases medical devices for hospitals, announces in a press release that it is shocked to learn that the price of such devices is going up:

The community-based, pediatric and academic hospitals served by Novation are reporting that many are being directly billed by at least one medical device manufacturer to cover the costs associated with the Affordable Care Act's medical device tax. But Novation . . . is taking a firm stance with suppliers who are trying to pass their medical device excise tax obligations on to hospitals.

While the administration of the Medical Device Excise Tax is complex and still evolving, it is clear that Congress did not intend to impose this tax on hospitals. . . .

"Novation is taking a firm position with manufacturers that the Medical Device Tax may not be passed onto the hospital members we serve," says Jody Hatcher, President and CEO of Novation....

Well what did they think would happen?

You run a business to make money. If the cost of supplies goes up, you have to raise your prices in order to still make a reasonable profit. If the cost of labor goes up, you have to raise your prices in order to still make a reasonable profit. Why should taxes be any different?

There is a name for a system in which a central authority dictates how businesses are run, what they produce, or how much profit they make.

Also- I've got a pacemaker. That's a $12-14k device I'll need every seven years or so. So that's $3oo-350 in medical device tax every time it's replaced. But I won't pay that directly. The insurance company will buy the pacemaker. Of course the pacemaker will cost more because we want Medtronic to survive as a company, and be there to make the next pacemaker in another seven years. So the insurance company pays more, and they then must raise the price of insurance to pay for the more expensive pacemakers, the free birth control, the annual check-ups, free breast pumps, etc. And the insurance premiums will go up for everyone, not just for people with pacemakers.

So yes, devices will cost more, medical care will cost more, and insurance will cost more. Some people will be able to get things for "free" but we'll all pay.


Gino said...

i'm seeing an emerging market for used/pre-owned/refurbished medical devices.

what if somebody got a new pacemaker, get hit by a bus 6 months later... we could pull that preowned unit out of him and sell it to another, with core xchange of course.

lumberjack said...

I heard that goes on in Africa - American devices are resold after having the battery replaced... dunno though, could be an urban legend.