Sunday, April 4, 2010

In the year 2013...

Before we move forward I'm afraid we must first take a step back. It seems as though there are a number of provisions in the healthcare bill that did not receive, well, any press coverage prior to the bill's passage. One such provision is Section 2572 which outlines the new federal mandate that all restaurants with more than twenty locations and all vending machines must post nutritional information on their food.

This section must go into effect no less than one year after the passage of the healthcare bill. Much of the implementation is yet to be determined (the bill gives power to the Secretary of Health & Human Services to determine the standards governing large portions of this section) but it has restaurateurs scrambling to figure out what this will mean for their businesses.

One thing they are certain of is that this provision will cost - every menu must be reprinted, not to mention signage. A big question restaurant owners do not have the answer to is how the nutritional content must be determined - is it good enough for restaurateurs to simply add the nutritional information of the ingredients used in preparation or must they conduct lab testing on each of their menu items. Again, these questions have yet to be answered, but with restaurant owners already nervous about other portions of the bill there can be little doubt that this portion will, at best, lead to a slower expansion of the restaurant industry and at worst, cost people their jobs.

2012

In the year 2012... not much happens. Why? Well, it's a presidential election year and President Obama will be up for re-election. He certainly wouldn't want any new, inconvenient provisions popping up when he is up for re-election now would he?

2013

Health plans must implement uniform standards for electronic exchange of health information to reduce paperwork and administrative costs. It's a bit Big Brother for my tastes but I'm not going to rally against this one. In the end this may help to control costs and provide better services through privacy concerns weigh heavily on this portion of the legislation - can the government ensure that electronic records are safe and will be used only for the intended purposes?

A 2.9% excise tax will be imposed on medical devices. I read a great article on this one highlighting the case of Zoll Medical Corporation, a business just outside Boston that is the nation's leading manufacturer of heart defibrillators. Zoll employs about 1,600 people in the United States and last year posted a profit of $9.5 million. Richard Packer, Zoll's Chairman and CEO, estimates that the new tax will cost them, "...between $5 and $10 million."

The media has been reporting a "mixed" reaction on the tax from medical device manufacturers... that's generous. The most positive reaction I've heard is from those folks who thought it could be worse. Bill Hawkins, CEO of Medtronic, told the WSJ that his company could cut 1,000 jobs to absorb the cost of the tax increase.

Tom Sommer, president of the Massachusetts Medical Device Industry Council summed the industry's feelings up nicely when he said, "You're certainly going to see an impact on growth and expansion by medical device companies in this country that are going to be faced by a higher tax bill. In addition to job cuts and rollbacks on expansion plans, you're going to see a reduction in R&D spending. Innovation in this industry is definitely in jeopardy."

As all taxes on business are, this tax increase will be passed on to the consumer, in the end raising the cost of healthcare, which I thought was the exact thing this bill was trying to contain...