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"Obamacare is a gravy train for these companies."
Steve Brill’s Bitter Pill
Steve Brill is our guest. He’s an old-fashioned reporter at book length – out of the David Halberstam school. He’s taken apart the passage of Obamacare in an investigation he titled America’s Bitter Pill: Money, Politics, Back-Room Deals, and the Fight to Fix Our Broken Healthcare System.
Short form: It’s the story of a messy democracy awash in special-interest money trying to reform a messy health care system itself awash in money and private powers. The moral is every bit of the discontent; everything that’s wrong with Obamacare comes directly out of the way the bill was cooked. There were many steps in good directions, Steve Brill would tell you, but still our politics and our doctoring both need emergency care.
Among the Washington compromises and insurance-industry negotiations, we’re discussing a story that hits close to home here in Boston, too: that of the medical device industry. As Steve Brill says:
The medical device industry is one of the most profitable industries. Their profit margins are through the roof; the leading medical device company, Medtronic, has much higher profit margins even than Apple.
So part of the Obamacare law that made some sense was: they put an excise tax of 3% on all medical devices—all durable medical equipment, as they call it. Now the rationale was we’re about to give people who make pacemakers, and artificial hips, and artificial knees, and neurostimulators for your back that nobody really needs but everybody gets—we’re about to give them tens of millions of new customers. Let’s get a little bit of a tax on them. It’s an excise tax, which means it’s not just on domestic companies, it’s on foreign companies.
And the industry howled. They said: This is a jobs killer; this is a profit killer; it’s terrible. And it wasn’t just the Republicans. In Washington, when it comes to healthcare lobbying it is bipartisan.
The sainted Elizabeth Warren is trying to get that tax repealed. Al Franken is trying to get that tax repealed, as well as the Republicans. It’s the one bipartisan thing going on capitol hill—is let’s repeal the medical device tax—because their tentacles are so deep on capitol hill.
Now is it a jobs killer? Is it a profits killer? Let’s look at Medtronic. Since Obamacare was signed, Medtronic’s profit is up 67% and it’s added more than 5,000 people to the payroll. Doesn’t sound like a jobs killer; doesn’t sound like a profit killer. … Obamacare is a gravy train for these companies. The idea that a 3% tax has hurt them is hilarious, there’s just no evidence of it.