Was Erik Paulsen Duped By Medical Devicemakers Or Is He Promoting Alternative Facts ?

It wasn’t alternative facts when Congressman Tom Price R-GA-06 offered H.R. 4848 “Healthy Inpatient Procedures Act of 2016” or the “HIP Act” … it was greed.

Background :
Medicare had announced a new regulation – Comprehensive Care for Joint Replacement Model. The CJR model’s goal was to give hospitals a financial incentive to work with physicians, home health agencies, skilled nursing facilities and other providers, promoting coordinated care.

Alternative Fact :
Mr. Price offered a bill to delay the implementation is in order to give all those involved time to better assess, review and weigh the impact and consequences of this proposal as well as more adequately prepare so patients are protected.

Greed :
Mr. Price had just purchased stock in Zimmer Biomet — a company whose prime business includes joint replacement medical devices. Days later, he introduced the HIP Act … and after that Zimmer Biomet’s political action committee donated to his reelection campaign.

Mr. Price, who is now the Secretary of Health and Human Services, is not the only Member of Congress to own stock in Zimmer Biomet … others have included Speaker Paul Ryan.

Zimmer Biomet is in the medical device industry … you know the one that Minnesota’s Third District “Representative” Erik Paulsen has anguished over the “onerous” 2.3% medical device excise tax (MDET) that was enacted as part of ObamaCare that is killing jobs and innovation.

Threatening a possible government shutdown in December, 2015, “Representatives” Paulsen, Price, Ryan and the Republican-controlled Congress reached agreement with President Obama for a two year suspension of the MDET … with no offset, thus the $2 billion that was collected in 2015 would not be due in 2016 or 2017.

The suspension was announced with glee by “Representative” Paulsen in a December 16, 2015 press release of the harmful, job-crushing effects of the medical device tax :

“It’s driven innovation overseas, harmed job creation here at home, and made it difficult for small businesses to grow. That’s why I’ve championed this bipartisan provision that repeals the tax for two years to prevent further job losses and remove an unnecessary burden for Minnesota innovators that manufacture life-saving and life-improving products.”

Since that was just a temporary suspension, “Representative” Paulsen quickly started 2017 with a new press release announcing :

As his first initiative of the 115th Congress, Congressman Erik Paulsen (MN-03) has introduced legislation that would permanently repeal the burdensome medical device tax.

The Protect Medical Innovation Act repeals the 2.3 percent excise tax included in President Obama’s health care law that applies to the sale of medical device products.

“One of the best ways to protect American manufacturing, spur innovation, and make sure the latest and best medical technology is affordable for patients is to repeal this burdensome tax,” Paulsen said. “We are already seeing new American jobs and increased investment in research and development as a result of the temporary suspension of this tax.

H.R.184 – Protect Medical Innovation Act of 2017 has garnered the 218 Republican sponsors — considering that there are 237 Republicans in the House, there is no reason to think that this would not be easily be enacted.

But should it ?
Remember that Congressman Paulsen, the Math Guy, is also warning us about the national debt — who could forget his H.R.4566 – Erasing our National Debt Through Accountability and Responsibility Plan Act of 2010 ???

So there is still the lost revenues to consider … but what about the “new American jobs and increased investment in research and development” that “Representatives” Paulsen hyped.

Is that true … or alternative facts ?

Well, if you read Zimmer Biomet 2016 Annual Report, that ain’t happening yet … they acknowledge that “operating profit as a percentage of sales increased” due to the two year moratorium on the MDET for 2016 and 2017. Suggesting that “In 2017, we intend to invest our savings from the medical device excise tax into our business in areas such as R&D, sales force speculation and medical training and education.”

OK … so Zimmer has done it yet … but they might … of course, they might not.

What about jobs ?
Well, the 2015 Annual Report stated :

Approximately 8,400 employees are located within the U.S. and approximately 9,100 employees are located outside of the U.S., primarily throughout Europe and in Japan.

Compared to the 2016 Annual Report :

Approximately 8,700 employees are located within the U.S. and approximately 9,800 employees are located outside of the U.S., primarily throughout Europe and in Japan.

Hmmm … a 300 increase in US jobs … but a 700 increase in foreign countries. Considering that Zimmer Biomet acquired LDR Holding (a US company) and its estimated 452 employees, which does not bode well for American job creation.

Maybe Zimmer Biomet is the outlier … or maybe the norm … consider this story [hightlights below]

Boston Scientific device tax reprieve spurs mostly ex-U.S. job growth

Boston Scientific, lobbied hard against the medical device tax levied in 2013, arguing the 2.3 percent tax on U.S. revenues would be a jobs killer.

But since the temporary suspension of the tax went into effect last year, the firm has grown its headcount far more quickly outside the U.S. than within our borders.

Boston Scientific (NYSE: BSX) said in its recent annual filing that it ended 2016 with “approximately 27,000 employees,” and that 14,000 of those were outside the U.S. That’s up from the 25,000 global headcount it reported a year earlier, when it reported that 12,000 of its employees were out of the country — implying that its U.S. headcount remained constant in 2016.

Boston Scientific has said that it paid around $75 million per year for the MDET while it was in effect.
$75 million no longer payable to Uncle Sam … so where did it go ?

Let us remember that the MDET is an EXCISE tax … meaning that it is essentially a user tax … you get a knee replaced, a tax is due.
The tax is collected whether the medical devise was manufactured in Indiana or India … thus, there should be an incentive for keeping jobs in America, and not outsourcing them.
Medical device makers were notified years in advance of the MDET being applied … thus they had years to incorporate the tax into the amount the user paid.
Which leads to the obvious question, if jobs and R&D were not the result of the MDET suspension, where did the money go ?
Well, Zimmer Biomet raised its dividend 9.1% … meaning that Tom Price got a bigger check.

Considering that this was to be a two-year suspension, isn’t it appropriate to ask the GAO to issue a report on how many jobs were created and changes in R&D spending before permanently repealing the MDET ?
Can we trust “Representative” Paulsen in the TrumpWorld of alternative facts ?

Consider that thought as you read Andy Slavitt (a former health care industry executive who was acting administrator for the Centers for Medicare and Medicaid Services from 2015 to 2017) OpEd in last week’s USA Today [highlights below].

First he needs to stop sabotaging Obamacare and indulging hardcore conservatives.

The dealmaker-in-chief badly wants a deal on health care. President Trump has even been willing to hold his nose and support terms put forward by the hardcore conservative House Freedom Caucus that are hugely unpopular with his own backers, like allowing insurance companies to turn down people with pre-existing medical conditions. Piled on top of a Republican bill with only 17% public approval, the further he goes to the right, the more likely he will come up empty-handed.

Since repeal didn’t go the way Trump thought it would, now is a good time for him to step back and decide what he wants to accomplish. The political imperative to repeal and replace the Affordable Care Act has shifted decisively. After learning about the alternative proposed by Congress, a record high 55% of Americans favor the ACA. Three-quarters say the president should try to make the law work and 61%, including a majority of Trump supporters, say he and the GOP are responsible for any problems going forward.

A little history is in order. Republican sabotage of the ACA predates Trump’s presidency. Championed first by outside groups and lawyers, one of the GOP’s biggest victories was stripping funding to insurers that was designed to keep rates from rising too fast. When Congress removed the money after the fact, among the first victims were a dozen or so new health plans called co-ops, included in the ACA to add competition in low-competition areas.

The law’s opponents went beyond garden-variety political tactics. They filed numerous lawsuits to cripple the ACA by pulling out core pieces. Insurers reported being warned by Republican congressional leaders not to participate.

The results of this sabotage include higher premiums, higher costs to taxpayers, millions of people in Southern and rural states left without insurance, and only one or two competitors left in many markets as insurers withdrew or were forced out of business. All so Republicans could point to the ACA and say, “See, it doesn’t work.”

Representative” Paulsen has done an excellent job representing his donors … suspending the MDET is another act of sabotage.
Judging from the number of calls for open town hall meetings, his reputation as a “reasonable” Republican working for Minnesota’s Third District constituents is being replaced by one who follows the Washington Establishment instructions that alternative facts are normal in TrumpWorld.

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