Indiana company scraps plans for expansion over ObamaCare device tax

[Caducus]

While I do understand that some of the provisions in the ACA are good and could have been passed with wide support such as the "pre-existing condition" provision and others. What I don't seem to understand is the logic applied in a tax on medical devices as a means of funding. If the intent of the bill is to cover more people and deliver medical care to more people as well as lower costs then this method seems a strange way to go about it. It would seem that a medical device company would simply pass along the costs of this new tax to their customers, i.e. the hostpitals, doctors, etc. who in turn will pass them along to the patients which will then be passes to the insurance companies, and if they are taxpayer funded the costs will be in the form of more debt and more spending to cover that cost.

The company in question here like every company that decides to go offshore although they have every right to do so, in my humble opinion should then lose the benefits accorded to American companies in the tax code , such as allowable deductions. Frankly we should be giving American businesses like this one tax cuts for doing business here, medical and otherwise not imposing a tax on them that has a questionable benefit. I am also of the opinion that if this company is working on such small margins that a rise in cost of 2.3% will force them to move new facilities overseas then suffer the same tax when they bring it back here, seems more than a little suspect. That said as I mentioned above any healthcare bill that is focused on lowering costs on the front end and not at the delivery point is going to have questionable results.

Navy1960, I am worried about that too, to me any medical insurance bill that didn't address malpractice insurance reform is just putting lipstick on a pig. But that doesn't mean we can blame it for this company's decisions.

 

[flacaltenn]

"Chase the profit margin"? Isn't that companies are supposed to do?

As far as I know, Medicaid and Medicare will only pay a certain amount for medical devices. Will they be raising their reimbursement rate 2.3%? Or will the cost be passed along to those of us who pay for our insurance at an even higher rate?

That's making a few assumptions that Medicare and Medicaid are the primary insurance companies that use their devices, which I cant figure out from the outside. The ones who would "pass the cost" to us would be hospitals, since they actually buy the device and resell to the patient as part of the treatment process. From a layman's perspective the one thing Obama care does is give additional people, who sometimes never paid their, medical bills insurance so the hospital has fewer non paying customers, so hospitals should see an increase in reimbursements.

I honestly think that either way this company will raise the price to account for this excise tax, and keep their profit margin neutral for US sales, and possibly increase it for sales outside the US. No one expects them to work for nothing ...

What part of an "AFFORDABLE CARE ACT" finances itself by raising the cost of every item in the medical inventory??? This is madness.

Medicare reimbursements are the de facto standards for reimbursement.. Negotiation between other Insurance regimes and providers START with Medicare codes and reimbursements and go from there.

A large part of my business is developing medical devices. I'll tell why my clients are leaving this county. It's because govt already WRECKED the marketplace here.

I sat in meeting years ago to discuss a new intelligient metered nebulizer to deliver C.F. drugs. After an hour or so, I realized that NONE of the marketing guys had mentioned what it should COST! So I asked --- and they LAUGHED.. Turns out that because Medicare defines that C.F. treatment reimbursement as an OUTPATIENT routine, they could charge OUTRAGEOUS prices for something that could be used AT HOME and would have normally revolutionized the cost of care. Essentially I was told "not to worry about cost"...

THIS -- is what has happened to medical costs. It's a BRAINDEAD bureaucratic bungle of regulations and price structures with unintended consequences of STIFFLING innovation to bring down costs.

That and FDA restrictions that don't allow companies to IMPROVE existing products without going thru another multi-million dollar round of full approval.. And the flock of vulture lawyers just sitting on sidelines waiting for an opportunity to turn statistics into cash.

No wonder my clients want to serve and develop OTHER world markets. This one is totally fucked by govt..

Yeah -- I bumped my own post.. I want ANY poster out there who doesn't think that regulation and reimbursement DICTATED by govt is DESTROYING innovation in the medical industry to READ that little personal experience ---- And tell me how that gets fixed with MORE BIG GOVT medical intervention and taxes..

 

[flacaltenn]

"Chase the profit margin"? Isn't that companies are supposed to do?

As far as I know, Medicaid and Medicare will only pay a certain amount for medical devices. Will they be raising their reimbursement rate 2.3%? Or will the cost be passed along to those of us who pay for our insurance at an even higher rate?

That's making a few assumptions that Medicare and Medicaid are the primary insurance companies that use their devices, which I cant figure out from the outside. The ones who would "pass the cost" to us would be hospitals, since they actually buy the device and resell to the patient as part of the treatment process. From a layman's perspective the one thing Obama care does is give additional people, who sometimes never paid their, medical bills insurance so the hospital has fewer non paying customers, so hospitals should see an increase in reimbursements.

I honestly think that either way this company will raise the price to account for this excise tax, and keep their profit margin neutral for US sales, and possibly increase it for sales outside the US. No one expects them to work for nothing ...

What part of an "AFFORDABLE CARE ACT" finances itself by raising the cost of every item in the medical inventory??? This is madness.

Medicare reimbursements are the de facto standards for reimbursement.. Negotiation between other Insurance regimes and providers START with Medicare codes and reimbursements and go from there.

A large part of my business is developing medical devices. I'll tell why my clients are leaving this county. It's because govt already WRECKED the marketplace here.

I sat in meeting years ago to discuss a new intelligient metered nebulizer to deliver C.F. drugs. After an hour or so, I realized that NONE of the marketing guys had mentioned what it should COST! So I asked --- and they LAUGHED.. Turns out that because Medicare defines that C.F. treatment reimbursement as an OUTPATIENT routine, they could charge OUTRAGEOUS prices for something that could be used AT HOME and would have normally revolutionized the cost of care. Essentially I was told "not to worry about cost"...

THIS -- is what has happened to medical costs. It's a BRAINDEAD bureaucratic bungle of regulations and price structures with unintended consequences of STIFFLING innovation to bring down costs.

That and FDA restrictions that don't allow companies to IMPROVE existing products without going thru another multi-million dollar round of full approval.. And the flock of vulture lawyers just sitting on sidelines waiting for an opportunity to turn statistics into cash.

No wonder my clients want to serve and develop OTHER world markets. This one is totally fucked by govt..

Yup -- bumped it again.. Looking for any of those dedicated, Government HealthCare, Single Payer, LuvObamaCare folks to comment on how "cost doesn't matter" with Govt defined reimbursements like I described..

 

[Navy1960]

While I do understand that some of the provisions in the ACA are good and could have been passed with wide support such as the "pre-existing condition" provision and others. What I don't seem to understand is the logic applied in a tax on medical devices as a means of funding. If the intent of the bill is to cover more people and deliver medical care to more people as well as lower costs then this method seems a strange way to go about it. It would seem that a medical device company would simply pass along the costs of this new tax to their customers, i.e. the hostpitals, doctors, etc. who in turn will pass them along to the patients which will then be passes to the insurance companies, and if they are taxpayer funded the costs will be in the form of more debt and more spending to cover that cost.

The company in question here like every company that decides to go offshore although they have every right to do so, in my humble opinion should then lose the benefits accorded to American companies in the tax code , such as allowable deductions. Frankly we should be giving American businesses like this one tax cuts for doing business here, medical and otherwise not imposing a tax on them that has a questionable benefit. I am also of the opinion that if this company is working on such small margins that a rise in cost of 2.3% will force them to move new facilities overseas then suffer the same tax when they bring it back here, seems more than a little suspect. That said as I mentioned above any healthcare bill that is focused on lowering costs on the front end and not at the delivery point is going to have questionable results.

Navy1960, I am worried about that too, to me any medical insurance bill that didn't address malpractice insurance reform is just putting lipstick on a pig. But that doesn't mean we can blame it for this company's decisions.

As I said, the ACA has many good and bad provisions in it, and honestly I see it a bill that failed to take into consideration that there are many Americans that might have something good to contribute to a healthcare bill. It has always seems to be that one major issue with healthcare was the cost in getting the insurance itself because healthcare costs themselves were high. So it would have made sense that if the costs were reduced and the availabilty of healthcare insurance was the same , let's say as buying an iPhone on ebay then you would have more Americans convered. Frankly it made little sense to address the issue of coverage and making an attempt to pay for that coverage without addressing the costs. Having said this, provisions like pre-existing condition, and other items like allowing one's kids to remain on a policy as well as others were very good in my humble opinion. As to the company in question here, the decision they made makes little sense in that they are still subject to the tax even if they import items made as a result of moving them offshore. So it seems on the surface at least the company is just another company willing to sacrifice long term American economic health for short term economic gain and is using this as a means to do so. It would make more sense if this company would say, advocate for an offset tax cut for companies like themselves who produce here that would cover the added tax.

 

[Claudette]

Forgive the newbee for interjecting but the medical device excise tax is still going to apply to devices sold in the US, moving the manufacturing oversees just frees them from the portion of their production that isn't sold here. If its cheaper to make and ship some of these devices here, then it is to pay the 2.3% then the issue isn't this tax, its everything else that causes higher manufacturing costs. Don't blame Obama for this, its just shrewd business on Cook Medical's part, they could still make a profit staying in the US but the margin is bigger elsewhere. In this case the company has a transparent reason to raise the price, I wouldn't be surprised if they raise the price across the board, and take that 2.3% in increased cash when a device is not sold in the US and pocket it. I think the company sees a way to make a bigger profit, and a scapegoat for not creating new jobs in the US at the same time.

If our government is so hard up for cash, why don't they slap a 2.3% fee on the imported devices. Cook Medical would build their plants here and employ people here. The issue IS the tax, which has far reaching consequences. Obama is to blame.

Why is there a tax on a medical device??

Shit. Talk about money mad assholes.

ACA is going to end up costing the taxpayers and those who have coverage up the fucking ass. There is nothing affordable about this clusterfuck.

 

[RoadVirus]

Why is there a tax on a medical device??

Because it was written by tax-addicted Democrats and shoved down our throats before anyone could read it and find out it was a mega-disaster in the making.