Medical Supplies Company Says Industry Will be Affected by Health Care Bill
November 17, 2010 (PRLEAP.COM) Health NewsThe recent midterm election results were either a major victory or a crushing blow, depending on whose side the individual was on. This election took on newfound importance with the recent passage of the health care bill that's fueled tempers across the country. With the outcome of this election leaning decidedly right, it's time to take a step back and reevaluate the health care bill, which has been the cause of so much recent debate.
It's taken a long time, and it it's going to take a while longer for the nation to really sort out the health care system. President Obama burst into office armed with a health care bill, full of the best intentions, brimming with idealism and philosophies, but recent election results have shown that the reaction has fallen flat. This is for good reason. Health care is arguably one of the most important policies implemented in a government system, and it is imperative that it works to the benefit of as many of the nation's constituents as is possible. When considering a nation's health care, it is important to take into account every segment of the country. This includes individuals of both lower incomes and higher incomes. It also greatly affects Drs. and health care professionals, hospitals, and goes down the line of medical supply companies from retailer to wholesaler, distributor, and manufacturer. The bill will also affect pharmaceutical companies, and many others.
Different sectors of the health care industry are being asked to pitch in to help fund President Obama's health care bill. As things stand, the outlook for a medical supply distributor looks bleak. With an estimated 30 million more people covered by health insurance in coming years, these companies are expected to get more business. However, the health care bill includes a 2.3 percent tax on all of their product sales. The question now becomes whether the influx in business will help cover the tax put on medical equipment companies. They might break even. At the very worst, they will go under. Dealmed, an East Coast based medical supply company, has pledged to retain their commitment to low prices and customer satisfaction even as the health care industry hits hard times. Dealmed has promised to put in every effort to retain their high standards and customer dedication by maintaining low prices on quality goods in the face of new government policies that threaten to engulf the industry.
Sen. John Kerry, D-Mass., who helped arrange meetings between medical device companies and Democrat leaders in Congress to convince them to cut the original proposed tax hike in half, maintained there would be a benefit for the companies.
"We've just expanded their marketplace by 32 million people who will now buy products from them," he said. "This is going to work out just fine."
Kerry, a Democrat, said the 2.3 percent tax in no way strips the profits or the ability of any company to do business.
"The medical device people were at the table. They agreed to this. They helped to write it and we need to just move forward," he said.
He pointed out that the tax doesn't apply to eyeglasses, contact lenses, hearing aids, or other retail medical devices purchased by the public. A main source of his opposition is Republican Sen. Scott Brown, who won a special Senate election in part by vowing to block the national health care bill. Brown quickly condemned the tax, calling it a threat to a local industry.
"For a lot of them, that's their profit that's going to be eaten up by this tax," Brown said, faulting President Barack Obama for failing to acknowledge problems in the health care bill. "The problems are the medical device companies are going to be whacked."
Senate Majority Leader Harry Reid, D-Nev., agreed to slash the tax from $40 billion to $20 billion in part to win backing for the health care bill from Democratic Sen. Evan Bayh of Indiana, a state with a significant medical device industry.
"When the negotiations started it was going to be $40 billion and our industry negotiated it down to $20 billion," he said. "We would be losing money instead of just breaking even, that's not my definition of a fair negotiation."
Mark Leahey, the president of the Medical Device Manufacturers Association, says the tax is unfair because some devices are used regardless of insurance status. He gives the example of defibrillators used for heart attacks. Leahey explains that incident of cardiac arrest is not going to increase or decrease due to more widespread health coverage, so these products will not see any increase in sales because of the new bill. However, they will still be taxed, refusing companies any profit from the product. In fact, Richard Packer, CEO of the Chelmsford, Massachusetts based Zoll Medical Corp., which employs 650 workers in Massachusetts, said the tax will put his company, which produces defibrillators, "at a break-even position" and dismissed the idea that companies should be grateful the tax wasn't higher.
Companies like Dealmed may see an influx in business involving diagnostics equipment due to the wider screening that will be available for people testing for cancer. However, the medical supply companies hold their ground that they will be losing an estimated 20 billion dollars in taxes over the next decade. This will force them to lay off workers and curb spending on medical research and production of new products. In short, the bill interferes with the natural laws of supply and demand.
The question remains what to do about health care reform because reform is needed. It remains to be seen who will win out in this epic battle.