February 07, 2012
3:37 pm
Even before its implementation, for which the Internal Revenue Service issued regulations last Friday, the medical device tax is already taking a heavy toll.
Late last year, a major device manufacturer, Stryker (a Healthcare Leadership Council member) announced that it was reducing its workforce by five percent to prepare for the financial hit that comes with the new 2.3 percent excise tax. Similarly, another device maker, Covidien, said it would lay off 200 workers in the United States and move some of its production to Costa Rica and Mexico – again, to compensate for this new tax created as part of the Affordable Care Act.
So, the tally thus far is hundreds of jobs lost to a tax that hasn’t even taken effect yet. The question is, how much more damage needs to be done before Congress takes corrective action.
The logic behind the medical device tax – which is a 2.3 percent tax on revenues, not profits – has always been severely flawed. Device manufacturers, tax proponents said, would not be hurt because the money lost to increased taxes would be recouped from the millions of additional Americans acquiring health insurance when health reform takes full effect in 2014 and a commensurate increase in health services utilization.
That argument, though, doesn’t hold up against even casual scrutiny. The vast majority of newly insured citizens will be the young, healthy ‘invincibles’ who have heretofore elected to bypass health coverage. From this population group, there won’t be a heavy demand for coronary stents or artificial hips. In fact, most medical devices are used in acute care settings, where health providers are already required to provide care for the uninsured.
There is hope on the horizon. Representative Erik Paulsen (R-MN) has gained over 225 cosponsors – a majority of the House of Representatives – for his legislation to repeal the device tax, and he has indicated that he has the word of the congressional leadership that his measure will be brought to a vote early this year.
The Paulsen bill should be enacted by the House, and the Senate should swiftly follow suit, before more jobs are lost to a tax that doesn’t even possess an acceptable rationale.
February 03, 2012
3:57 pm
Earlier this week, I posted in this space about the need for Congress to take the issue of entitlement reform seriously, and to avoid undermining serious discussion about proposals to improve Medicare with glib 30-second sound bites and attack ads during the upcoming campaign season.
But I only addressed half of the equation that is instrumental to constructive discussion on this issue. As a group of physicians serving in Congress pointed out this week, organizations representing the interests of different population groups also have critical roles to play in this dialogue.
In an open letter to AARP, 18 doctors serving in the House and Senate point out, accurately, that “the American people deserve a mature, informed and thoughtful conversation about how to save the Medicare program and shore up its financing.” They add that, absent reform, “AARP members aged 50-56 today – as well as future members – will see the end of Medicare as we know it.”
The doctors, in the letter, invite AARP to participate in publicly urging all members of Congress, regardless of political party, to “acknowledge the approaching insolvency of the Medicare trust fund and the program’s structural financing challenges.”
They’re right. Structural change to Medicare, which is necessary if we’re to achieve long-term sustainability while maintaining quality and innovation for patients, will face a steep uphill battle if influential interest groups marshal their resources in opposition. To the contrary, progress relies not just on officeholders, but also powerful advocacy groups, acknowledging that the status quo cannot be maintained and that change is necessary.
All of us who are engaged in healthcare policy advocacy bear this responsibility.
February 01, 2012
12:55 pm
In its annual budget and economic outlook, the Congressional Budget Office has clearly outlined one of the most serious fiscal challenges the country is facing. As the U.S. population ages, healthcare spending is expected to rise by eight percent annually between 2012 and 2022. This means that government spending for Medicare, Medicaid and other healthcare programs will more than double to $1.8 trillion over the next decade.
The significance of this CBO report cannot be overstated. Medicare’s financial challenges aren’t in some distant, far-off future. They’re happening right now. Ignoring these problems today brings us closer to a tomorrow in which Congress will have to either significantly raise taxes or enact harmful cuts to Medicare services in order to keep the program solvent and prevent this spending escalation from becoming a drag on the economy.
This warrants serious discussion by our elected officials. To their credit, Senator Ron Wyden (D-OR) and Congressman Paul Ryan (R-WI) have advanced this dialogue through their bipartisan efforts on Medicare reform. Whether their colleagues in Congress will follow suit is an open question.
Last week, the New York Times’ Robert Pear authored an article, “Medicare Seen as Battleground Issue in Congressional Races.” In this story, it’s pointed out that congressional candidates are being urged by Washington, DC advisors to make Medicare a focal point of their campaigns, but not in any meaningful way that lead toward solution-focused discussions. Rather, the issue is being raised in 30-second radio advertisements and ‘robocalls’ to voters claiming that lawmakers who supported the initial Ryan reform proposal “favor millionaires over Medicare.”
I’m not naïve and I don’t wear rose-colored glasses where partisan politics are concerned. I know that candidates have to take actions that move polling numbers. But elections have consequences, and needed Medicare reform has already been set back years by scalding campaign attacks against those who have advocated change. The success of those attacks has reduced the number of lawmakers willing to take on this critical, yet politically dangerous, issue.
The juxtaposition of the CBO report – and director Doug Elmendorf’s testimony before the House Budget Committee this morning – and the Pear story is a matter of concern. CBO has laid down the challenge. We can hope that Congress responds with more than attack ads and glib sound bites.
January 30, 2012
3:33 pm
If you smoke tobacco, you’re not going to be hired for a job by the Baylor Health Care System. For that matter, you don’t need to waste time filling out an employment application form at the Cleveland Clinic either. Both healthcare providers have made it clear that they will not accept smokers within their respective workforces.
In its editorial today, USA Today says this type of policy is wrong. The newspaper argues that employers like Baylor CEO Joel Allison and Cleveland Clinic CEO Toby Cosgrove (both members of the Healthcare Leadership Council) have every right to offer smoking cessation programs to their employees and even to make smokers pay more out of pocket for their workplace-provided health insurance. But, USA Today says, it is improper to penalize a job applicant for practicing a legal habit on their own time.
According to the newspaper’s editorial, “A bit further down (this) road lies hiring based on genetics. In that world, inheriting that shows a predisposition to a costly disease could cost you a job.”
USA Today is wrong, and not just because of its nonsensical comparison of a voluntary activity like smoking to an individual’s genetic makeup.
Today’s healthcare providers are expected not only to provide excellent care for the patients, but also to encourage wellness, disease prevention and healthy behaviors among all individuals they have the ability to influence. As Dr. Paul Terpeluk of the Cleveland Clinic said in his “opposing view” in USA Today, “We have a unique perspective on the burden of chronic disease. We not only treat disease, but we also play a vital role in educating patients and employees about lifestyle choices. It is only right to practice what we preach.”
There’s also a significant economic issue involved here. When an employer, particularly one who provides health coverage, hires an individual, they are assuming the burden of his or her healthcare costs. An individual may smoke on their own time, but the employer winds up footing much of the bill for the chronic illnesses associated with smoking. Should an employer be allowed to consider the increased health costs, absenteeism and loss of productivity associated with a voluntary, unhealthy behavior like smoking? It’s hard to argue that they shouldn’t.
And in an environment in which five percent of the population is responsible for 50 percent of our healthcare costs, this is a concern that goes well beyond Baylor and the Cleveland Clinic.
I know both Joel Allison and Toby Cosgrove. They are both gentlemen who have dedicated their lives and careers to providing better health to their fellow citizens. Their no-smoking policies are neither mean-spirited nor discriminatory. Rather, they are intended to make a vitally-needed statement about wellness and healthy living both within and outside the confines of their respective institutions.
January 24, 2012
3:40 pm
If you’ve ever watched the movie “The Sixth Sense,” you see what a talented director and writer can accomplish by withholding critical information from the audience. In that movie (and, no, I’m not going to spoil it if you haven’t seen it), M. Night Shyamalan holds back an essential fact about Bruce Willis’s main character until the very end of the film. When that fact is revealed, it changes the entire context of what we thought we knew about the story.
What works well, though, in the cinema isn’t necessarily a sound methodology when it comes to public policy matters that affect lives. Transparency is public matters is virtually always a good thing, but when the practice of transparency reveals facts without context, it can be counterproductive.
Dr. Thomas Stossel, a professor of medicine at Harvard Medical School, discussed this issue in a Wall Street Journal op-ed this week, “Who Paid For Your Doctor’s Bagel?” In his op-ed piece, he discusses the Physicians Payment Sunshine Act, a new law that will require medical innovation companies to disclose any transfer of value to physicians. The Centers for Medicare and Medicaid Services (CMS) has recently issued draft guidelines for implementation of the new law.
Again, in principle, this type of transparency is a good thing. But when the new law results in a list of consulting fees and other payments made by pharmaceutical and medical device companies to physicians, there will be a piece of the puzzle still missing. What is the purpose of that exchange beyond a minimalist bureaucratic definition such as “consulting fee?” What was the impact for patients and for the current and future practice of healthcare? Without this context, negative inferences can be made about any exchange of value.
As Stossel wrote in the Journal, “The media already exploit disclosures….to demean physicians compensated by royalties from useful inventions that they license to companies, or who were paid consulting fees for advice concerning the optimal use of products, or for educating other physicians about products.”
The fact is that collaborations between physicians and industry have led to some of the most important medical breakthroughs of the last several decades. Physicians help guide industry on how to make new innovations beneficial for patients. Companies train physicians on the optimal use of new drugs and devices. This sharing of knowledge is essential to the advancement of healthcare.
We’ll be discussing this issue in greater detail in the months ahead. HLC launched an initiative called the National Dialogue for Healthcare Innovation and, through this effort, multiple organization representing healthcare providers, health industry sectors, academia and patients have been developing a consensus set of principles to help guide future physician-industry collaborations. More to come.
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