Critical Condition

Darkness Before Dawn?

In the bizarre, upside-down world of Washington, Sen. Jon Kyl (R., Ariz.) tried and failed to convince his colleagues on the Senate Finance Committee last week to drop a $40 billion tax on medical devices from its health-reform bill, arguing correctly that the tax simply will be passed on to consumers in the form of higher costs.

Recalling that one of the primary goals of the reform effort is to lower the cost of health care and insurance, this tax makes little sense. Nonetheless, Kyl’s amendment was defeated.

But even more bizarre is that Kyl was forced to offer an “offset,” i.e., another tax, even for the privilege of offering his amendment, and he took criticism for that from Sen. Debbie Stabenow (D., Mich.).

The health-reform legislation moving through Congress is stacking up to be a lose-lose-lose scenario for taxpayers, consumers, and patients: To eliminate one tax, members must come up with another to offset it. The tax increases inevitably will increase health costs for consumers. And the new taxes — not to mention the crushing new rules and regulations on the health sector — will discourage innovation and lead to lower quality care. That’s quite a trick, considering health “reform” is designed to benefit all of us — at a cost of $1 trillion or more.

The new tax Kyl wanted eliminated would be levied on medical products that cost more than $100, such as glucose monitors, stents, hip replacements, and electric scooters.

The device companies thought they had a deal during negotiations over health reform earlier this year, voluntarily offering to cut costs. But Congress is looking in every corner to find revenue to pay for its government takeover of our health sector and decided their offering wasn’t enough. 

“The device manufacturers stood up at the White House promising they would contribute to reform with real savings, and we expect they will live up to that promise,” Scott Mulhauser, a spokesman for Senate Finance Committee Democrats, said in a statement. “This reasonable fee will ensure that the industry helps contribute to that reform.”

The cost would be about $4 billion a year, almost half of what the entire industry spends on research and development. The tax would be imposed on revenues, not profits, so even companies that are losing money would be forced to pay. The tax clearly would inhibit investment and development of innovative medical products.

But Congress is plowing ahead to get health reform done this year, no matter what the American people may think about it, and it looks more and more like legislation will pass.

The president will meet with about 60 physicians at the White House today in an effort to show physicians’ support for his health-reform plan. Hundreds of thousands of doctors who are fearful about further government intrusion into their medical practices somehow did not get invited.

Both the Senate and House have cancelled a Columbus Day recess this month to keep members in the Beltway hothouse and away from town-hall meetings with their constituents.

The Senate Finance Committee is awaiting word from the Congressional Budget Office on the price of its final package — which still is not a bill but a collection of changes to the chairman’s summary of his proposed legislation.

When the Finance Committee votes this week, that will mean that all of the five committees with jurisdiction over health reform will have completed work on comprehensive bills.

The two bills in the Senate will be merged, with more amendments offered during the floor debate. The House will follow the same process in merging its three committee bills into one for a floor vote. President Obama will sign whatever health reform measure Congress passes.

Let’s hope this is the darkness before the dawn, because the feeling in Washington right now is pretty gloomy among supporters of freedom, markets, and individual control over health-care decisions. Winning a few votes to turn down a “public plan” before the Senate Finance Committee is far from a final victory.

Endless parliamentary maneuvers are possible, and there remains a great number of unresolved issues in all of the bills, including taxes and the public option.

Some Democrats are convinced that failing to pass sweeping health-reform legislation will mean voters will retaliate against them at the polls next year. Others believe that, even if Americans are frightened and outraged over a government takeover of our health sector, it will be worth whatever political cost must be paid to get this next item on the liberal agenda in place.

– Grace-Marie Turner is president of the Galen Institute.