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“Cloaked In Secrecy”: The Myth Of The Medical-Device Tax

In the last few days of negotiations in Congress, repeal of the Affordable Care Act’s tax on medical devices emerged as a key Republican demand. The medical-device industry waged an intense lobbying campaign — even garnering the support of many Democrats who favored the law — arguing that the tax would stifle innovation and increase health care costs.

This argument is doubly disingenuous. Not only can the medical-device industry easily afford the tax without compromising innovation, but the industry’s enormous profits are a result of anticompetitive practices that themselves drive up medical-device costs unnecessarily. The tax is a distraction from reforms to the industry that are urgently needed to lower health care costs.

The medical-device industry faces virtually no price competition. Because of confidentiality agreements that manufacturers require hospitals to sign, the prices of the devices are cloaked in secrecy. This lack of transparency impedes hospitals from sharing price information and thus knowing whether they are getting a good deal.

Even worse, manufacturers often maintain personal relationships (sometimes involving financial payments like consulting fees) with physicians who choose the medical devices that their hospitals purchase, creating a conflict of interest. Physicians often don’t even know the costs of the devices, and individual physicians often choose devices on their own, which weakens a hospital’s ability to bargain for volume discounts.

Such anticompetitive practices help generate a wide variation in the prices of medical devices — and contribute to higher prices in general. For example, the Government Accountability Office found that prices for cardiac implantable medical devices in the United States vary by several thousand dollars. And even the lowest-priced devices in the United States are expensive compared with those in other developed countries. According to the consulting firm McKinsey & Company, the United States spends about 50 percent more than expected on the top five medical devices, compared with Europe and Japan. McKinsey calculates that this amounts to $26 billion in excessive spending each year. Medicare, private health insurers and patients end up paying these inflated prices.

Excessive prices fuel enormous profits — profits that dwarf both the medical-device tax and the industry’s investments in research and development. Consider the device division of Johnson & Johnson, which in 2012 had an operating profit of $7.2 billion. By the company’s own estimate, the device tax would amount to at most $300 million, and its investment in research and development amounts to only $1.7 billion.

There are several ways policy makers could lower device costs. The first step would be to end the anticompetitive practices that prevent hospitals from getting the best deals. Senator Charles E. Grassley, Republican of Iowa, has sponsored legislation that would foster transparency by posting online price information for implantable medical devices.

In addition, instead of simply paying hospitals based in part on what they have spent on devices, Medicare should force manufacturers to compete for business based on a product’s price and quality.

Medicare should also pay hospitals a single lump sum for all of the associated costs of a given procedure (like a hip replacement). This approach, known as “bundling” the costs, would create incentives for hospitals to lower device costs. Savings should be shared with the physicians, so that their incentives are aligned with the hospital’s.

Bundling has been used successfully in pilot programs. Under Medicare’s Acute Care Episode Program — which bundled payments for cardiac and orthopedic procedures — physicians worked together to choose high-quality, cost-effective devices. Baptist Health System in Texas, which participated in the program, used clinical evidence to choose devices and negotiated lower prices for both Medicare and non-Medicare patients.

States could adopt similar payment reforms for private insurance and their Medicaid programs. In Arkansas, the Medicaid program and private payers — including Walmart — have collaborated to adopt bundled payments for several procedures, including hip and knee replacements.

To complement these efforts, the new Patient-Centered Outcomes Research Institute, a nongovernmental body created by the Affordable Care Act, should pay for research that compares the effectiveness of devices so physicians can make informed choices. (Three years into its existence, the institute has initiated few, if any, studies of medical devices.) Medicare or the Food and Drug Administration should also require the use of registries that track when devices fail.

Currently, medical-device manufacturers allocate only a sliver of profits to research and development and often focus on “tweaks” to existing devices, without providing any evidence that they are of better quality. Competitive pressures from public and private payers would provide incentives for the industry to become more innovative, producing technologies that actually lowered costs and offered truly advanced breakthroughs.

Instead of using its clout to lobby against the device tax — which helped foment opposition to the Affordable Care Act — the medical-device industry needs to share the responsibility of lowering costs for patients, businesses and taxpayers.

 

By: Topher Spiro, Op-Ed Contributor, The New York Times, October 16, 2013

October 17, 2013 Posted by | Big Business, Health Care Costs | , , , , , , , | 1 Comment

“Republican Collapse”: They Picked A Goal They Couldn’t Achieve And A Means They Couldn’t Sustain

Congress has finally worked out a deal to end the government shutdown and dodge default, but not before the Republican Party demonstrated to Americans just how conflicted and dangerous it is.

Benjamin Wittes, a senior fellow in governance studies at the Brookings Institution, this week described our current Congress as a greater danger to national security than Al Qaeda, writing, “We don’t tend to talk about Congress as — at this stage — what it plainly is: the clearest and most present danger in the world to the national security of the United States.”

That is what the G.O.P.-led House has brought us. Conservatives outside the chamber know defeat when they see it, and want to live to fight another day. But they beat their chests in vain as their laments fall on the deaf ears of the far-right political death squads.

On Tuesday, the conservative Wall Street Journal editorial pages blasted:

“This is the quality of thinking — or lack thereof — that has afflicted many GOP conservatives from the beginning of this budget showdown. They picked a goal they couldn’t achieve in trying to defund ObamaCare from one House of Congress, and then they picked a means they couldn’t sustain politically by pursuing a long government shutdown and threatening to blow through the debt limit.”

Senator John McCain said this week, “Republicans have to understand we have lost this battle, as I predicted weeks ago, that we would not be able to win because we were demanding something that was not achievable.”

Senator Lindsey Graham put it more bluntly: “We really did go too far. We screwed up.”

But, far-right elements of the House cannot be reasoned with. They prefer to go down in a blaze of glory — or at least take the country down in one.

And arguably no one is more the face of this disaster than Senator Ted Cruz of Texas, labeled by one New York Republican representative, Peter King, as a “fraud” and “false prophet,” who helped orchestrate it.

The Houston Chronicle editorial board on Tuesday took the extraordinary step of trying to withdraw its endorsement of Cruz, an endorsement that no doubt helped get him elected. An editorial posted to the paper’s Web site began, “Does anyone else miss Sen. Kay Bailey Hutchison?”, the senator Cruz replaced. It went on:

“When we endorsed Ted Cruz in last November’s general election, we did so with many reservations and at least one specific recommendation — that he follow Hutchison’s example in his conduct as a senator. Obviously, he has not done so. Cruz has been part of the problem in specific situations where Hutchison would have been part of the solution.”

It seems everyone is waking up to what a disaster this current Republican contingent of extremists has become and how poisonous they are to the functioning of our democracy. Better late than never, I suppose.

Cruz’s favorable ratings are underwater in Pew’s, Gallup’s, Fox News’ and Quinnipiac’s polling.

But then, Cruz doesn’t put much stake in polls, with their pesky numbers.

According to an NBC News/Wall Street Journal poll taken last week, views of the Republican Party sank to record lows and 70 percent of respondents thought Republicans in Congress were putting their own political agenda ahead of what was good for the country.

The poll also found that negative feelings about the Tea Party had risen, with 47 percent saying they had negative feelings about the group, including 34 percent who described their feelings as “very negative.” Just 21 percent of Americans now say they feel positive about the group.

But when Cruz was asked Friday about the poll, he dismissed it as having a problematic methodology. He said: “If you seek out liberal Obama supporters and ask them their views, they’re going to tell you they’re liberal Obama supporters. That’s not reflective of where this country is.” In fact, it is Cruz’s methodology that is flawed. His grandiloquence may well be the undoing of the Grand Old Party.

According to a Pew Research report released Tuesday:

“A record-high 74% of registered voters now say that most members of Congress should not be reelected in 2014 (just 18% say they should). By comparison, at similar points in both the 2010 and 2006 midterm cycles only about half of registered voters wanted to see most representatives replaced.”

The report also found:

“An early read of voter preferences for the 2014 midterm shows that the Democrats have a six-point edge: 49% of registered voters say they would vote for or lean toward voting for the Democratic candidate in their district, while 43% support or lean toward the Republican candidate.”

Republicans terribly misplayed a weak hand on the government shutdown and the debt ceiling. There was never any chance of success other than scaring the president and the Democrats into caving. President Obama and Harry Reid called their bluff and they were left with no real options.

This is an embarrassment for the country, yes, but it’s also an embarrassment for the Republican Party that lays bare their motives, tactics and intention. It may not be so easy for voters to forget this come next November.

As the conservative Matt Drudge tweeted on Wednesday: “Speaker Pelosi Part 2: Opening Jan 5, 2015.” If only.

By: Charles M. Blow, Op-Ed Columnist, The New York Times, October 16, 2013

October 17, 2013 Posted by | Affordable Care Act, Debt Ceiling, Government Shut Down, Republicans | , , , , , | Leave a comment

“A Very High Price”: A Lesson For Moderates In The Government Shutdown Denouement

We should never govern ourselves like this again. We cannot create absolutely pointless crises that make our great democracy look foolish around the globe. We cannot give Chinese government propagandists fodder as they call for “a de-Americanized world.” We must not allow the extremist politics of a tea party minority to turn our republic upside down.

Our nation escaped the worst. But there were consequences to the decision of a craven House Republican leadership that knew full well it was picking a fight it could not win. House Speaker John Boehner did the right thing at the very end but only after a series of time-wasting gestures designed to coddle his party’s radical wing. These are the folks who denied the dangers of going past the debt ceiling, see the Affordable Care Act as a Stalinist adventure, compare President Obama to Al Capone and, in many cases, still aren’t sure where our twice-elected president was born or what his religion is.

As long as Boehner permits this lunatic fringe — there’s no other way to describe it — to have a virtual veto power in his caucus, we will descend into chaos again and again. And as long as more middle-of-the-road conservatives hang back because they fear primary challenges, scoldings from Heritage Action or occasional insults from the talk-show barons, the Republican Party will remain in receivership.

Those who genuinely want a more moderate approach to politics must also reflect on what just happened. Obama and an astonishingly unified Democratic Party insisted that there could be no negotiation over raising the debt ceiling. It was time, they said, to stand up against government by intimidation. This made many who chase the political center, no matter how far to the right conservatives might drag it, uneasy. Their critiques took many forms: that Obama should “lead” more, that he should be more “involved,” that refusing to negotiate sounded so ill-tempered.

The irony the centrists must confront is that there is now a larger opening for moderate governance precisely because foes of the far right’s extra-constitutional abuses of the congressional process stood firm. In doing so, they brought a large majority of the American people with them. Republicans paid a very high price for a benighted strategy, which gives the most thoughtful among them at least a chance of pushing their party back to more reasonable ground.

And because the effort to hold the country hostage to right-wing demands failed, a crisis of this kind is less likely in the future. Sen. Ted Cruz and those who joined his doomed crusade against Obamacare find themselves discredited. Cruz acknowledged as much when he slipped away, announcing he would not block a deal of the very sort that, just days earlier, he was denouncing as a shameful sellout.

Obama needs to build on this victory. He must push the national and congressional agendas back toward the issues the nation cares about — above all, shared and more rapid economic growth and lower unemployment. This, in turn, means a real effort over the next two months of budget talks to ease deep sequester cuts that are harming the economy in exchange for the first steps toward longer-term deficit reduction.

To keep the initiative, Obama needs to engage with Congress as he never has before. His recent efforts to build relationships with more level-headed conservatives such as Sen. Bob Corker appear to have paid off in this round, and he could use help from such Republicans again. He should extend his diplomacy to members of his own party who stood with him in this fight and who would be bolstered by expressions of presidential gratitude that they have not always received. His task is to build a broad front against crisis-to-crisis governance by rebuilding confidence in government itself and the role it plays in American life.

But nothing good can happen unless Republicans take on their extremists and unless everyone acknowledges that ,at the moment, there is no equivalent on the left side of American politics to the right-wing radicalism that has just put our country through this wasteful and dangerous exercise.

In condemning the paranoid politics of the John Birch Society in 1962, William F. Buckley Jr. asked his fellow conservatives whether they would “continue to acquiesce quietly in a rendition of the causes of the decline of the Republic and the entire Western world which is false.” This is, alas, a live question again. It must be answered forcefully and fearlessly.

 

By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, October 16, 2013

October 17, 2013 Posted by | Debt Ceiling, Default, Government Shut Down | , , , , , , | Leave a comment

“The ‘Fraidy Cat Group”: Why We Probably Won’t Get Another Government Shutdown In January

So we probably now have a short-term continuing resolution set to expire in January. Does that mean another shutdown in January, after the two sides can’t reach an agreement? After all, that’s what happened in 1995 and 1996: a relatively brief shutdown in the fall was followed by a five-week deadlock in the winter. Is that what we’re going to get?

Probably not.

What the shutdown that appears to be ending today and the 1995-1996 episodes had in common was important: in both cases, one side really wanted the shutdown. In 1995, Newt Gingrich and many Republicans sincerely believed that Bill Clinton was personally weak and would fold if pressed hard enough. That turned out to be wrong; whether it was a foolish idea to test it in the way Gingrich did remains, I suppose, an open question.

This time around, the logic of the showdown gang was clearly foolish; no objective observers believed their stated plan would work; it would have required a massive surge of anger at the Democrats for allowing the government to be shut down over the Affordable Care Act (ACA), but most Democrats like the ACA, and polling indicated that practically no one outside of tea party circles favored a shutdown over it.

There have been a lot of very contentious budget arguments over the last few decades, but none of the others ended with a prolonged shutdown; the next-longest one after those was only three days.

What causes an extended shutdown, then, isn’t missing a deadline. In fact, deadlines are probably needed to get deals done. As long as neither side actively seeks a shutdown, one of three things will happen: they’ll make a deal by the deadline; they’ll miss the deadline but going over the deadline will be enough to get it done; or, they’ll agree to move the deadline.

The question as we approach the next finish line, then, isn’t whether we’ll go close to the edge. Of course we will, but that’s a feature, not a bug (on a shutdown; flirting with the brink on debt limit is a far riskier thing to do). Real negotiations are hard; it takes time to sort out what the real asks are and what’s just bluff.  The question is whether a significant faction of the Republican Party wants to do this again, and, if so, whether the rest of the party will accommodate them again.

My guess, as of now, is that this one was devastating enough that we won’t see a repeat. That doesn’t mean that Republicans will back off their demands; it just means that they won’t see any additional utility in fighting through a shutdown.

My biggest worry? This wasn’t 1995-1996, when the GOP was generally united behind the belief that a shutdown would work for them. Instead, the dynamic this time was that a relatively small group wanted it, and a much larger ‘fraidy cat group was terrified of allowing any visible difference between themselves and the radicals. That could repeat itself next time — and the radicals, especially those in outside groups, may actually be pleased with the fundraising results of this fight, even if it hurt the party overall.

However, it’s reasonable to hope that mainstream conservatives learned their lesson from this one and won’t do it again; there’s also the hope that those radicals who are actually driven by policy goals may also have learned something.

Overall? One way or another, budget deadlines are absolutely necessary. And we won’t get a shutdown unless one side wants it.

 

By: Jonathan Bernstein, The Washington Post, October 16, 2013

October 17, 2013 Posted by | Budget, Government Shut Down | , , , , , , | Leave a comment

“Looking Back On The Carnage”: How Republicans Won Nothing And Lost Everything In The Government Shutdown

Two and a half weeks into the government shutdown, and with a disastrous debt default mere hours away, Speaker of the House John Boehner (R-Ohio) on Wednesday finally reached for his one escape lever.

The House on Wednesday is expected to vote on a bipartisan Senate-brokered bill to reopen the government and raise the debt ceiling. “We fought the good fight, we just didn’t win,” Boehner said in announcing he would bring the bill for a vote, which should pass with support from Democrats and moderate Republicans.

Though Republicans originally demanded a steep ransom, the inexorable path to Wednesday’s deal wrought havoc on the party brand while delivering them absolutely none of the gleaming prizes they wanted. And plenty in the party told them this is exactly how it would end.

First, the terms of the deal are quite favorable to Democrats. The one concession Republicans won in the deal? The implementation of an income verification system in ObamaCare for people seeking federal subsidies.

Except it’s hardly a concession. The health care law originally had similar verification requirements, though the Obama administration in July delayed them to 2015. In short, the GOP will get a minor tweak to the law that was in there in the first place.

At the same time, the deal will force the House and Senate to convene a budget committee to hammer out a new spending agreement. Democrats have been repeatedly asking for just such a committee since at least April.

The GOP’s failure to win any concessions is all the more painful when you consider that a different strategy — to be blunt, a sane strategy — could have put real pressure on Democrats.

Before the shutdown, Republicans had a chance to vote for a clean continuing resolution to fund the government through November 15 at the reduced levels mandated by the 2011 debt-limit deal. Instead, the House balked, repeatedly sending the Senate untenable bills attacking ObamaCare.

Had Republicans approved the original “clean” offer, they would have had a second crack at addressing spending within two months, and an untarnished image as they tried to wield the debt ceiling as leverage. By putting all their chips in an utterly futile plan to defund ObamaCare, they squandered both.

While Republicans gained virtually nothing, they will be bleeding from this battle for a long time to come.

Republicans entered 2013 clamoring for a “rebrand” after losing the 2012 election. The shutdown has set that effort back so far that they might as well have rewound the clock to the eve of Mitt Romney’s defeat.

An NBC/Wall Street Journal survey midway through the shutdown found that only one-quarter of Americans had a favorable opinion of the Republican Party, an all-time low. Other polls showed Democrats opening up wide leads in generic balloting, and suggested they could retake the House in 2014.

Democratic Congressional Campaign Committee Chairman Steve Israel (D-N.Y.) told the Washington Post that the GOP’s huge slide in polls had allowed the party to recruit a handful of stronger candidates who otherwise would have stayed out.

“In a number of districts we had top-tier, all-star potential candidates who several months ago didn’t see a path to victory,” he said. “They reopened the doors.”

Though Democrats’ big polling advantage will likely fade to some degree come 2014, the party is, for now, in good standing heading into the midterm elections, particularly in the Senate, where candidates have to appeal to a wider ideological swathe of voters.

The shutdown fallout could also have an impact next month in Virginia. With the shutdown dragging on, Democratic candidate Terry McAuliffe pried open a wide lead over Republican Attorney General Ken Cuccinelli. McAuliffe aired an ad directly linking his opponent to Sen. Ted Cruz (R-Texas), the shutdown’s architect. And even Cuccinnelli conceded the shutdown was negatively impacting his campaign.

Meanwhile, Cruz has also exposed a deep rift in the congressional GOP between the establishment and the Tea Party. Though conservative members say they won’t oust Boehner from his leadership post for caving on the debt ceiling, the House caucus has been left more fractured than ever, with outside conservative groups blasting GOP members unwilling to tank the economy as the “surrender caucus.”

That’s not even taking into account the huge gulf opening up between House Republicans and Senate Republicans.

Such divisions could spawn fractious primary fights next year. Business groups, concerned with their waning influence with the GOP, have already said they may help finance primary campaigns against Tea Party lawmakers.

Even Republicans, looking back on the carnage that was the shutdown, have begun to admit it was a costly mistake.

“We took some bread crumbs and left an entire meal on the table,” Sen. Lindsey Graham (R-S.C.) said. “This has been a very bad two weeks for the Republican Party.”

 

By: Jon Terbush, The Week, October 16, 2013

October 17, 2013 Posted by | Debt Ceiling, Government Shut Down, Republicans | , , , , , , | Leave a comment

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