What the bill mandates is utterly surreal. For example, there is a $2 billion annual tax imposed on medical device companies through 2017, increasing to $3 billion thereafter. Each of these firms must report their sales to the Treasury, who will then apportion the $2 billion tax amongst the various companies. Since no one knows exactly how many medical devices are sold in America, the companies haven’t the slightest clue what their cost per device will be. Let’s say 10 million are sold in the first year – that would mean a fee of $200 per device. But what if sales are driven down because of these higher costs (not to mention the real possibility that some of the companies will go out of business because of these huge new fees)? What if only 7 million devices were sold in the second year? The tax per device would now be $285. That would not only drive up the price of devices again, but – more importantly – it will profoundly discourage product innovation and investment because no one would be able to anticipate their gross production costs.
The elimination of one specific deduction has recently received a lot of media coverage. Companies that provided a prescription drug benefit to their retired employees were until now able to deduct 28% of the cost. It is estimated that this exemption saved taxpayers about $544 per person compared to the price of Medicare Part D for the same drug benefit. Now Congress has told corporations that you can pay the benefit, but you cannot deduct the costs, which is why all these large companies are taking massive loss write-offs. How long will it be before the companies stop providing this benefit? Believe me – when this happens, there will be a further outcry from the Left; the demagogues will point fingers at private industry; and, again the argument will be made for a totally government-run health system.
There’s also a new requirement that companies with 50 employees provide health insurance. What happens to the employer who has 48, then 49 employees? They have to decide whether to expand and be harnessed with the new costs and administrative requirements, or stop the growth of their company. Talk about a job-killing provision.
Nancy Pelosi stated that this bill would create 4 million new jobs – 400,000 in the first year alone. It’s pretty clear that these jobs will all be the new government employees necessary to oversee these mandates, and administrative employees needed by businesses to comply. Not one productive job will be created, but thousands – maybe tens of thousands – will be lost or shipped overseas. The people of India are already salivating. If you thought our health care system hindered our international competitiveness before, just wait until Health Care Reform is fully implemented.
The only saving grace is that the bill takes on a favorite constituency of the Democrats – Hollywood. The bill adds a 10% tax on tanning salons. No doubt, that should balance the budget.