The Deadly Tax on Medical Innovation
Most technology aficionados are familiar with Moore’s Law, which states that computing power tends to double roughly every two years. The average American experiences this most clearly when purchasing personal computers. In 1998, Apple introduced its iMac computer with a 233 MHz processor, 32 MB RAM, and 4 GB hard drive, for a price of $1300. In 2010, Apple’s low-end iMac includes a 3.06 GHz processor, 4 GB RAM, and a 500 GB hard drive for $1200. This represents a greater than 10-fold increase in processor speed and over 100-fold increases in RAM and hard drive sizes for roughly the same nominal dollar amount (30% fewer real dollars after adjusting for inflation).
Similar but more quiet progress has also occurred with medical technology. During my medical career, MRI scanners have advanced from creating crude but workable images of brain tumors to generating high-resolution scans displaying not just their anatomic extent, but also their internal chemical composition and the extent of functional disruption caused to the rest of the brain architecture. These advances allow doctors to plan surgery and radiation treatments in an extremely precise fashion to remove the tumor while preserving as much normal brain function as possible. As Clayton Cramer has observed, modern American medicine is much closer to the Star Trek “Sickbay” than doctors could have imagined a mere 20 years ago.
Raymond Kurzweil has generalized Moore’s Law as “The Law of Accelerating Returns,” arguing that technological progress overall follows a roughly exponential curve. This exponential curve is a natural reflection of the fact that today’s progress forms the base of tomorrow’s innovation. This create a virtuous cycle in which innovators continually build on each other’s work, adding to an ever-increasing fund of knowledge, which in turn allows for future innovations. When people are left free to innovate, the exponential gains they create are therefore akin to the exponential growth we see in our bank balances when we allow compound interest to operate over time.
However, such exponential gains are not automatic. Moore’s Law (and Kurzweil’s generalization) are not laws of nature. Instead, they presuppose a system of government that leaves innovators free to create. Conversely, a government that penalizes innovation could dramatically slow the pace of medical progress, leading to millions of preventable deaths. And this may be one of the worst long-range consequences of the recently passed ObamaCare health legislation.
One of the many new taxes imposed by ObamaCare is a 2.3% excise tax on medical device manufacturers. Although this may not seem like much, it could be devastating to small companies working with thin profit margins.
For instance, the Zoll Medical Corporation is one of the leading manufacturers of automated external defibrillators (AEDs). These devices are commonplace in airports, shopping malls, and other public places. They are meant to be used by members of the general public to give immediate life-saving electrical shocks to someone suffering sudden cardiac arrest.
Advances in hardware and software have made these devices sufficiently reliable that they can be safely used by “Good Samaritan” bystanders with no formal medical training. The AED device itself analyzes the patient’s electrical rhythm and gives voice instructions to the user as to whether and when to safely shock the patient. According to a recent paper in the New England Journal of Medicine, making AEDs widely available to the public could significantly improve the survival rates of cardiac arrest patients.
However, the ObamaCare tax would impose an additional $7.5 million annual burden on Zoll, nearly eliminating their annual profit of $9.5 million. As their CEO Richard Packer recently explained on a Fox News interview with Neil Cavuto:
PACKER: So, it almost wipes out our profits.
CAVUTO: So, you have a couple of choices here. You cut jobs or send them overseas, or you increase the price of your product, not easy to do.
PACKER: Yes, or cut back on research and development. And our business is built around new science, new clinical trials.
CAVUTO: Or a lot more people die as a result…
[Emphasis mine.]
To make matters worse, it is the small startup companies which are the engine of so much innovation that would be disproportionately harmed by this tax.
ObamaCare could thus strangle many promising developments in their cradles before they ever reached the marketplace, such as new cancer treatments, handheld diagnostic equipment, nanotechnology, etc.
And the worst aspect is that we will never know what new technologies could have been developed and how many lives they could have saved — an example of Frederic Bastiat’s principle of the seen and the unseen. As with any exponential process, small changes in the rate of growth will have a dramatic effect on the final total after twenty years.
Most investors already know this. An initial investment of $5,000 compounded at an annual rate of 2% would yield $9,000 after 30 years. If the interest rate were 8%, the return would be over $50,000. If the interest rate were 12%, the return would be nearly $180,000.
Although the investor receiving the 8% return rate would certainly be better off than the investor earning only 2%, he’ll never know how much more he would have enjoyed with a 12% return.
Similarly, we will still see some medical advances over the next 20 years despite ObamaCare. But what additional life saving advances will be stifled because of this deadly tax on innovation? Will we miss out on cures for Alzheimer’s disease, stroke, or breast cancer?
Fortunately, Americans can still enjoy these future benefits. But to do so, we must demand that our politicians repeal ObamaCare and instead implement free-market reforms that leave companies free to innovate and leave consumers free to spend their own medical dollars for their best interest. The resultant explosion in medical innovation could transform and improve our lives over the next 20 years at least as much as innovations in computer technology have done in the past 20 years.
For most people, using a 1998 home computer to surf the internet in 2010 would be unthinkable. For most doctors, using 1998 medical technology to treat brain tumors in 2010 would border on malpractice. When you need medical care in 2020, don’t let the regulatory state handcuff your doctor with 2010-era technology. Your life may depend on it.
Medical innovation is racist and means inequality… down with it! (Sarcasm, yes; not for left/liberals, though.)
Besides a numerical mismash reminiscent more of Regan’s supply-side economics graph, Moore’s law has nothing to do with medical devices. No more than sex toys. Indeed I know a medical device manufacturer. Besides manufacturing offshore, thus killing American jobs, he spends his time not innovating but swooping in on his competitors. He literally brags to customers how he undercuts and destroys competition by undercutting and patent litigating. He’ll drop the phone and fly to a customer even at a loss, just for umbrage against the competitor. Aside from that he molested his daughter and is a staunch republican.
Crawl back into your closet, troll.
That’s really no way to talk to yourself.
Boom roasted!
Any analogy, by definition, is not a perfect fit.
The article was essentially correct and you did not seem to make any point refuting the article.
You almost sounded drunk
Is that what your coach told you to say to teachers for better grades?
Drunkenness wears off, unlike slovenly sloppy sweeping statements.
You do realize, of course, that medical devices are technology, don’t you? It’s We’re far past the era of considering leeches to be medical devices.
Oh, and nice ad hominem at the end. Did you support John Edwards?
CW,
I was going to say something similar in that medical devices can be the physical result of millions of simulations run on computers to find just the right device design before prototyping and manufacture. Putting a tax on the device manufacturers means less capital to invest in computer technology to run the simulations means less innovation.
The loss of innovation is what scares me. When my dad got his pacemaker it was top of the line technology. It saved money bacause unlike older pacemakers which contantly provided the impluses to regulate the heart beat, the newer ones emit the impulse only when it is needed, thus saving on cost of a new battery and the cost of the procedure to install it. The new ones further save cost because they can even non-invasively monitor the battery and know just exactly when to replace it. Just six years later when the battery in my dad’s needed to be replaced, they instead replaced the whole thing because innovation had developed an even better model. I don’t know if it was at a lower cost, but I am grateful the tech is there to keep him alive. Now with his heart depending more and more on the pacemaker, I wonder how this will effect technology advances that would further reduce the need to open him up to replace the battery? This condition can be inherited so I can probably look forward to having to get one myself. The question I think now is, will manufactures be able to still provide devices of the quality and tech that we have now, or will they be reduced to going back to making devices that are technologically inferior?
Actually, leeches have had quite a comeback in medical treatment.
I have read about the leaches before. Creepy but it seems to work. Maggots are also being used to treat infections. Interesting stuff. Not all new tech is better than the old school. I have sufferd allergies all my life and I have yet to find anything new that works any better than the stuff I was using 20+ years ago. They just cost more and require a prescription. I briefly saw a piece on some type of parasite that helps reduce auto-immune and other problems. I’m not sure I am ready to infest myself just yet. Not that I doubt its claims, but it would seem a bit extreme for the occasional nasal allergies. Unless the eczema ever comes back. I never found any real relief from that particular torture except by accident when I moved to Colorado.
So, would these creatures under Obamacare be considered medical devices?
I saw a similar article and intend to follow the research. It is intriguing to me and since my spouse suffers allergies it might turn out to be a low tech remedy for her.
Indeed. Even parasitic worms are being researched for treatments of things like MS (and since I just did the MS Walk yesterday, I kinda have that on my mind).
And, going back to the original concept, do you think they’d be coming up with the new worm and leech treatments without computers to help them?
Well, I try to never say never. To need computers to advance leech or worm technology does seem far fetched to me, but who knows? Maybe it will be with computers that scientists figure out how to make the substances these critters produce so we can produce it in a lab.
MS is also on my mind since my cousin is pretty well debilitated by it.
Chemman, my sympathies to your wife. I know how she feels!
By your standards fire and the wheel are technology. And that wasn’t an “ad hominem at the end.” Though by demonstrating you don’t grasp simple concepts, you did my job for me.
Obviously, you are so steeped in Marxist dogma that you’ve dismissed logic altogether.
Get that asperger’s syndrome looked at yet?
Only one daughter? He’s not welcome at my tea party!
Moore’s law has everything to do with newer medical technology. They both rise up from the same root, as explained very clearly in the article.
As to your story, even assuming it is true, so what? Are you trying to claim that small companies produce no medical innovation? If so, that lie is easily disproved by looking at the many new products produced by small companies.
There’s no connection between Moore’s law and newer medical technology. No more than banking policy or the weather. The only connection Hsieh drew was mentioning them in adjacent paragraphs. While that may be enough for you, it’s not something to brag about.
Maybe the connection is not explained in the article but Moore’s Law is related both directly with respect to increasing density and performance of electronics and indirectly to broader developments in med tech.
I am a medical device manufacturer and the vast increases in computer power and electronics density enable applications that could barely be dreamed of a few years back.
This tax is one of the most bone-headed moves I’ve seen from our friends in Washington.
I see it in the broader context of the “war on made in the USA”; which both Democrats and Republicans are waging against the USA.
A progressive national sales tax to replace the IRS/witholding. Higher the luxury higher the tax;
Zero on grocery store meat, fish, fruit, and vegetables et al; 100% on high end cars…
If you want universal health care, just contract Canada to administer the program exactly like Canada with two small changes:
1) $15 co-pay for all non-emergency visits.
2) $1,000 co-pay for non emergency, emergency room visits.
Beyond that, Canada has it’s health care exactly correct…include the cost in the calculation of the national sales tax; no income tax at all…
So nurses striking and leasing out wings of near abandoned hospitals to film companies to make some money while cancer patients leave for America to get life saving treatment is getting it right?
alledged individual examples do not mean anything. In the USA they do great things in medicine and they screw up…
Having to join a lottery in order to get a doctor, months long waits for MRI’s and surgeries, watching to well-connected and well-to-do go to the USA for treatment…
Sounds like heaven to me. Bureaucrats in charge of health care…what could go wrong?
It’s far more than a few individual examples. It’s a nation wide disgrace.
Yes people are rushing to the USA so they can enjoy the 47th ranking in life expectancy.
The two small changes would be good except for one small problem. Co-pays are supposed to be paid up front but most people won’t pay it. There is always an excuse, I don’t have any money with me or I can’t pay it all at once. We don’t usually enforce the copay upfront because it can turn into a public relations nightmare. If we tell them they can’t recieve services till they bring the money in, which is our right according the the patient’s own insurance policy, they start yelling that we are discriminating or refusing treatment (this in NON-emergent mind you). I know, I work in a small town hospital and I know who has money and who doesn’t. So, maybe we need to add one other bit. If they claim they don’t have the money on them, we can turn them upside down and shake till the money falls out of their pockets. Just kidding of course, but maybe the rule could be that if they show up for non-emergent services and refuse to pay the copay at the time services are rendered, they will be responsible for the entire bill and not just their copay. Forgetting to bring it should be no excuse either.
BTW, I definitly do not endorse Canada’s system. But I do think copay’s for non emergent services need to be such that they discourage peeps from using the ER for non emergencies. Non emergent use of the ER is a big problem and increases not only costs for the hospital but drives up insurance premiums. It also clogs up ER treatment rooms that are needed for real emergencies. The worst part is peeps coming in because they have a cold or a minor injury will complain about having to wait. They don’t give a damn that the Doctors are busy treating patients with more severe conditions. The selfishness is unbelievable.
I’ve seen it!…..
“Sorry….no money to pay you”…..as they smile with their gold teeth, then open the Louis Vuitton bag to show you all they have is a smartphone and a few packs of cigarettes…
With freshly done fake nails no less!
Higher the luxury higher the tax;
You think the millions of workers who make, sell, operate, and maintain/repair those items don’t need their jobs?
Been tried with a yacht tax; result was massive layoffs. But smug morons felt really good about “sticking it” to “the rich.”
Ms invalid objection HeatherRadish: Not sure what planet you live on or where your planet moron is; but I can tell you with 100% confidence that the USA has never tried replaceing the income tax with a progressive national sales tax. One can only presume you represent tax attorneys who would need to get a real job if the USA abandoned the income tax in favor of a progressive national sales tax; and you can be sure they will still buy cars and boats…ms invalid objection HeatherRadish.
Mr. Getty,
Why, you argue like a true scholar!
Not.
Heather (who did deserve a little rudeness back, given her use of the word “moron”)raised a concern that many people may have: that when sales taxes have been raised on luxuries in the past, such as the Yacht tax, they have done significant damage to the industry, leading to huge layoffs.
Excerpt from “Shipwrecked in New Jersey” by Robert A Peterson, in The Freeman – http://www.thefreemanonline.org/columns/shipwrecked-in-new-jersey/ :
“With so many benefits “trickling down” to middle-class and poor Americans, it’s hard to understand why Congress would seek to destroy the boat-making industry. Yet that’s exactly what it did in 1990 when, according to a Wall Street Journal report, “Congressional Democrats [were] eager to show they were being tough on the rich.” A ten percent tax was added to the cost of luxury yachts. Since a yacht today costs anywhere from $100,000 to $200,000, this means that at least $10,000 had to be paid to the government before a potential buyer could get his first whiff of salt air. With the economy already heading for trouble, this was the proverbial straw that broke the camel’s back. Ocean Yachts in Weekstown trimmed its workforce from 350 to 50. Egg Harbor Yachts entered Chapter Eleven bankruptcy, going from 200 employees to five. Viking Yachts dropped from 1,400 to 300 employees. According to a Congressional Joint Economic Committee Study, the boat industry nationwide lost 7,600 employees within one year. As Bob Healy, president of Viking Yachts explained on NBC News, “Every six or seven years, you have a down cycle. You might be off 20 percent, 30 percent, or 40 percent at maximum. Our industry is off 90 percent nationally”
I understand that your proposal is to do away with income tax entirely, which would certainly free up all that money taken from the upper middle class and the wealthy. But it isn’t immediately clear that the luxury taxes would still not exceed the amount many wealthy would be willing to pay for a yacht and other luxuries. You suggested a tax of 100% on high end cars. Maybe this would not make any difference at all to sales of high end cars to the super wealthy. But I don’t know what it would do to sales to the “marginally” wealthy, people who would buy a car at $60,000, but not at $120,000. And I don’t know whether those lost sales would harm the marginal luxury producers or not.
True, if the wealthy didn’t have to pay income tax, they would have more money to invest in other segments of the economy (and so would middle class people), so perhaps a drop in luxury goods sales wouldn’t matter to the economy as a whole and to employment. But these are the kinds of ideas that need to be explored.
Economics is a complex and tricky business, and you have put forward an untried idea. You said so yourself: “…but I can tell you with 100% confidence that the USA has never tried replaceing the income tax with a progressive national sales tax.”
Has this replacement been tried elsewhere? If so, to what results?
If you are serious about this idea, and want others to take it seriously, then you need to address people’s concerns reasonably and with the awareness that the burden is on you to provide the evidence that this plan can work. You do your case no good by engaging in name-calling (even if Heather did use the term “moron”) or by failing to address the legitimate concerns of those who haven’t yet examined in-depth the plan you’re offering.
A fixed consumption tax with a provision for rebating the taxes paid on poverty level consumption would be a great idea; taxing different items at different rates, however, would be a mess, and only a slight improvement over the current system, if it’s an improvement at all.
Jay, I encourage you to investigate how Carter’s luxury taxes devastated many industries in the US. The boat building industry still hasn’t recovered to it’s pre-tax levels.
As to the rest of your class warfare nonsense, take it back to the DNC were it belongs.
My impression is that the luxury tax on yachts became law in 1990…The administration of Bush senior (but yes a democratic congress). I also agree that the industry still hasn’t recovered and may never be what it was. However, all the ills of our current economy can’t be linked to only democratic presidents.
Who gets to decide what is a luxury and what isn’t?
In politics the only rules-of-the-road or laws there are is [1.] There’s a sucker born every minute and [2.] Whatever you can get away with go for it.
There are no direct, exponential or inverse punishments and/or rewards involved in politics. There is no accountability. People that have no clue what planet they live on can vote with the same immunity and power that heads-of-state or corporate CEOs have.
Hence, we have a population that thinks it is cute for the President to con an intern the same age as his daughter into giving him oral sex in the Oval Office while he speaks on the telephone with other heads of state around the world.
Or we have the same population that wanted so bad to feel so good about itself that it didn’t matter that the man they were voting for is an America, Caucasian and Jew hating Black Liberation Theologian who fully intends to do as much damage to the United States of America as he can while he is in office.
In this kind of environment the only things that can cause change are great fear and massive suffering.
Are enough Americans now afraid because of what Obama is doing? Have enough Americans been made to suffer enough personal pain in their lives to turn against Obama and his agenda?
The answer is “No”. If this were not true there would have been no reason for Dr. Hsieh to write this article.
#3 has it very close to right. As hospitals are driven to government dependency, capital investment will dry up because they will only have funds to invest if they are given them by government. Big ticket and high tech items will be the first to go under the “regionalization” concept (where it is “justified” by efficiency and/or cost savings). Forget about three dimensional angiography for acute stroke control or non-surgical aneurysm management.
Some of the restrictions are justified…robotic surgery tends to be overblown and is being shown to have little efficacy over traditional interventions for prostate surgery. Lasers for everything used to be terribly fashionable.
Capital investment by private physicians and clinics has already dried up until the smoke clears.
It isn’t just the tax. The US Patent and Trademark Office took upon itself the task of defending the American people from, among other things, HIV-related patents, as a matter of policy. They’ve done the same thing the FDA has done, simply imposing delay and increasing the costs to a business, without input from Congress or the judiciary. This goes back to the Clinton years.
I do wish we would study the electronics industry as a model for revising the medical field economically. Nobody within the government has tried to contain costs of electronic devices, and yet the level of innovation, coupled with price drops, has been astounding.
Maybe what we really need to do is re-examine our assumptions about the exceptionalism of medicine.
Dr. Hsieh makes a great point. Many people take for granted that only capitalism allows for this kind of rapid technological advancement. When capitalism is gone, and there is no incentive to innovate, kiss that ever-increasing living standard goodbye!
One problem with this innovation argument is that it is very abstract. Research shows that people discount the future very heavily, so talking about future innovations isn’t going to excite people as much as talking about giving them “free” access to current technology will.
Of course, one would expect our current self-proclaimed “elites” to understand an abstract argument and decide in favor of the greater long-term good. Yet another contradiction in their thought processes.
This tax is like a smart bomb designed to destroy one of the last strong manufacturing sectors in the United States.
I recently participated in a study that compared manufacturing a medical device in the US or Malaysia. The cost of manufacturing in the US was less, until you factored US taxation. This tax makes that situation worse.
Manufacturing, and the jobs related with that production, will move more quickly overseas, once this tax hits.
Sad day for America, when our government destroys jobs for our people.
“…leading to millions of preventable deaths”
It’s a feature, not a bug.
More deaths, less patients, lower healthcare cost, no?
Bonus: more deaths, less carbon footprints.
Is it any surprise BHO wants to destroy medical creativity, innovation, and advances? His M.O. has nothing to do with helping people – it has everything to do with grabbing more power for himself and his minions. Mr. Hsieh, you begin the article with Moore’s Law, but the fact is, while computer processing power has increased exponentially over the past 12 years, as you say, performance has not likewise increased, b/c with increased processing capacity has come the computer companies loading them up with worthless junk, making them destined for obsolescence within a short time. Increased computer processing capacity isn’t necessarily directly proportional to increased performance. Medical innovations, on the other hand, often do result in a directly proportional relationship with improved health. The comparison of computer advancements to medical advancements, while related, is apples and alligators.
If one is foolish enough to buy a computer from a company like Apple or Dell, as opposed to building their own, well, there’s this saying about sleeping in made beds, or something like that.
Apples and alligators? Really? MRI’s, CT scanners and many other diagnostics and treatments RELY on computers to produce the necessary images to detect diseases. It is advances in computer tech that have increased image quality, speed of scanning and production of images. Computer technology and medical technology are more than related. BTW, do you really think the computer geeks at a medical research firm would put up with computers and useless apps created by Apple or Dell? I know a few computer geeks in other specialized fields. They build their own computers and write their own apps.
I didn’t say medical advances didn’t utilize computers or electronic devices – what I said was medical advances & computer advances are different. Yes, computers have advanced and perform better than in years past, but those advances don’t improve computer longevity and durability in the same way that medical advances improve human health. If computers are so great, as you seem to be saying, why must they be replaced every 3-5 years? Do you know anyone who has (and still uses) a computer older than 5 or so years, especially laptops? Jiminy, even cardiac bypass surgeries last longer than that. Most companies have included in their budgets monies for computer upgrades, hardware replacement, training, etc., (some as much as 20%) & this was unheard of just 20 years ago . . . . gee, how did we ever survive those times w/o today’s computers?
There is a trivially simple method for removing any program that you don’t want.
Instead of complaining, do something for yourself.
This article makes a point I have been emphasizing with my friends and colleagues for some time. It is this. There are two ways that will immediately contain health care costs.
1. Ban all medications and technology invented after 1964, the year Medicare passed. This will instantly reduce the costs of medical care.
2. Deny medical care to every person over age 80 who does not contribute more in taxes than they consume in government benefits.
Neither of these is as absurd as what we will endure in the future under Obamacare. But twenty years from now when the youth that helped him get elected start to slip into the years of increasing health needs only to find that there are neither enough physicians nor enough innovations to provide for them, I doubt any will remember what they helped engineer in 2010.
There are many things about Obamacare that don’t make sense … until you realize that the purpose of the legislation was not to improve the US healthcare system, but instead to collapse it.
If they don’t invent new treatments, then the death panels don’t have to deny them.
Dr. Hsieh points to an important principle which effects more than the new medical devices we will never see because of the new health control law. We also will not see all the bright, independent-minded young adults who choose not to become physicians because of the stultifying effect of health care regulations and controls. We will not see creative new ways financing the risks of health problems. We will never know of the lost opportunities for new drugs and new diagnostics. Even the development of the much touted electronic medical records software will be hindered and distorted by new mandates, insulating manufacturers from free market competition and the greater cost-effectiveness which it brings.
Meanwhile, politicians will vociferously take credit for what we can see–the greatly expanded entitlement programs accomplished by robbing Peter (and Peter’s children and grandchildren) to pay Paul.
Dr. Hsieh’s insightful essay draws attention to one of the most dangerous consequences of government regulation and taxation of the health care industry — the chilling effect such laws have on medical innovation. This is yet another important reason for opposition to Obamacare and to support true free market reforms in medicine. Obamacare must be repealed and we must reduce or ideally eliminate the tax and regulatory burden on medical companies as well as the rest of the economy.
Just as the banning of DDT killed millions in Africa due to the spread of disease by mosquito`s, Obamacare will kill Americans needlessly. Barry`s idealogy is killing us softly. He`s `helping` us to death….
The greenies are always telling us that the planet is over crowded. They would like the total human population reduced to less than 100 million.
At the core of all this are two factors: Americans want a high end life style even if they do not produce competitive output. The people that live off government produce nothing but want to live better than the top producers rest-of-the-world. Second, the only way to improve lifestyle for producers and not-producers, is to increase productivity. That takes capital and Obama and the democrats are out to destroy capital through taxation and regulation.
This can only end one way.
Actually, there is a relationship between Moore’s Law and medical innovation. Improvements in computing technology have made a huge contribution to the great improvements that we’ve seen in recent decades. Diagnostic technology tends to be very computationally intensive. Much of the reduction in the cost of scanners has come because the needed computing power cost a tiny portion of what it did when those technologies were new. Likewise, many of the new diagnostic technologies make use of the manufacturing techniques first applies to microprocessor industry. Consider also, the field of genetics is still in its infancy. In just the last decade the amount of useful data we can derive about a patient’s genome has multiplied while the time and cost required has dropped rapidly. The era is foreseeable when nearly everyone has a full genomic assay as a minor cost in exchange for vastly more accurate diagnostics, pharmaceutical decisions, and benefit to the population as a whole from the deepened understanding of how our bodies work. (A million human genomes are a far more meaningful statistical tool than the handful that exist today.) I could go on but suffice to say Moore’s Law matters hugely to medical innovation.
So yeah, the advance of semiconductor and related technology means a lot to medical advances. Retarding the ability of companies to apply that technology in an economically viable fashion is to nobody’s advantage. Unless you’re a politician or bureaucrat trying to figure how to get rid of those expensive old people whose been promised so much in exchange for their votes long ago, or their parents’ vote still longer ago.
this is off point but important
what is happening now in massachusetts is serious: people are abandoning health insurance until they need an operation, then signing up for insurance, and giving it up when the operation is over. this saves them lots of money. it is breaking the (non-profit) insurance companies, who cannot raise their rates (enforced by the state) and cannot afford paying for operations without corresponding revenue. They want to stop taking new policies.
There is a solution: separate medical insurance into two parts: routine care, and major medical. Allow relatively cheap major medical policies with high deductible, which can be subsidized for the poor. Allow medical savings plans for routine care. Rein in malpractice suits. No discouragement of innovation by taxation or government refusals of service.
my apologies for intruding here.
this is off point but important
what is happening now in massachusetts is serious: people are abandoning health insurance until they need an operation, then signing up for insurance, and giving it up when the operation is over. this saves them lots of money. it is breaking the (non-profit) insurance companies, who cannot raise their rates (enforced by the state) and cannot afford paying for operations without corresponding revenue. They want to stop taking new policies.
There is a solution: separate medical insurance into two parts: routine care, and major medical. Allow relatively cheap major medical policies with high deductible, which can be subsidized for the poor. Allow medical savings plans for routine care. Rein in malpractice suits. No discouragement of innovation by taxation or government refusals of service.
my apologies for intruding here.
No problem. Obamacare is a stopgap until the stupid Americans realize what they need is the public option. No more greedy insurance companies to overcharge sickly victims. The rich will pay their fair share of taxes to pay for the poor’s healthcare. The problem with Masscare is the greedy insurance companies could exploit the sickly victims in the other 56 states if they are forced to shut down their operations in Mass. With Obamacare, they have nowhere else to go but to the bankruptcy court. The govt. will come in to save the day. The IRS will make sure the rich pay. The greedy doctors will receive a wage according to a govt. guideline. Afterall, a MickyD cook works as hard as a doc. It’s not fair to discriminate against a MickyD cook to pay a doc more.
Excellent article Paul. Thank you for presenting this information so clearly and with real-world examples that drive the point home.
Regards,
–
C. Jeffery Small
An infected body politic will have USA pay to lose innovations.
But many decisions we are seeing here, are designed to serve foreign elite investments that have deselected America… And further exacerbated by a personal goal; as Presidential Powers are being used to shift successful Medical (and science) innovations from (USA) to pay-back a specific ‘cultural identity’ for the (supposed) western technology theft, of a different age…
If you don’t believe me, watch closely as to what is slowly being shifted, and what identity will benefit… The worst theft will be waged against our innovators…
“For most doctors, using 1998 medical technology to treat brain tumors in 2010 would border on malpractice.”
How does the cure rate for brain cancer today compare with the cure rate for brain cancer of 1998? Does anyone know?
Re survival rates.
Signs Of Brain Cancer In Women
Check out NCI’s Cancer Mortality Maps and Graphs. It’s a complex subject because in addition to improved treatment – which helps survival rates – there’s improved diagnosis – which leads to more diagnoses.
An infected body politic will have USA pay to lose innovations.
Many decisions here, are designed to serve foreign elite investments that have deselected America… And further exacerbated by a personal goal, as Presidential powers are being used to shift successful Medical (and science) innovations from (USA) to pay-back a specific ‘cultural identity’ for the (supposed) western technology theft, of a different age…
If you don’t believe me, watch closely as to what is slowly being shifted, and what identity will benefit… The worst theft will be waged against our innovators…
Government intervention was already a problem in the healthcare field. Reimbursement by both government and private insurers is generally based on Medicare codes. Such codes only exist for established therapies and devices. Thus, it is difficult to get reimbursement for anything new.
Medicare Advantage plans gave some flexibility in this. But under Obamacare, those are being eliminated.
This is true. I am a medicare biller and I can’t remember the last time any device or treatment came off of the Medicare non-covered services list. The most they ever do is add or clarify items already on it. We see more and more insurance companies turning to Medicare guidelines. I am certain that under obamacare, they all will.
Medicare and Social Security are going sour because people are living too long. FDR assumed people would croak at 68 or less. Obama sees this and he is working quietly to bring life expectancies in line with FDR’s vision.
At the same time he will make sure that national politicians, movie stars and whales all die at 90 or better so that the rest of us will assume that dying at 65 is bad luck.
Which means we ought to stop dancing around the fact that Obama and his ilk are evil. Anyone who thinks the solution to any problem is reducing human life expectancy and/or reducing the number of kids we have is evil. The right way to deal with the Social Security problem is to raise the age one can claim it to 75, to account for life expectancy gains.
It must be difficult to be a Leftist – all that cognitive dissonance.
“everyone” obviously knows that raising taxes on something reduces it. That’s the entire point of “sin taxes”: Tax it while you can and get the added benefit of cutting down on the behavior.
Why leftists do not understand that the same principle applies to all taxes is baffling.
More tax on medical devices = fewer medical devices. It’s the same as 2+2=4: Obvious. What is the point of defending it? If they cannot generalize from “more tax on cigarettes = fewer cigarettes”, which is the entire point of the high tax, why bother even trying to engage?
Paul Hsieh wroteObamaCare could thus strangle many promising developments in their cradles…Sort of a habit with him, isn’t it… just consider it a late term abortion of American innovation.
Another fine editorial. I particularly liked these identifications:
“However, such exponential gains are not automatic. Moore’s Law (and Kurzweil’s generalization) are not laws of nature. Instead, they presuppose a system of government that leaves innovators free to create.”
and
“And the worst aspect is that we will never know what new technologies could have been developed and how many lives they could have saved”
Thanks again for taking the time to arm the public with these important facts and arguments.
“Conversely, a government that penalizes innovation could dramatically slow the pace of medical progress, leading to millions of preventable deaths. And this may be one of the worst long-range consequences of the recently passed ObamaCare health legislation.”
If this were a bug in the HCR bill I would agree. The only way to bend the cost curve is to stop this type of innovation so more people die earlier in their lives.
Obama wants the U.S. to be just like the former Soviet Union . . . a few chosen elites live like the Windsor’s, while the rest of the lumpen proletariat spend all their time struggling to survive.
The former middle class will be so busy standing in bread lines and waiting twelve hours to see a nurse-practitioner that they won’t have time to do anything else.
Grim looking future, eh?
Perhaps a more telling example is the recent series of developments in endoscopic, or “minimally invasive” surgery. Using robotic effectors at the end of a flexible tube, doctors can do surgeries – including heart, kidney, and sinus – through a small incision that formerly took large cuts. Not only does this lead to much small scars, it can result in significant cost savings and greatly reduced trauma to the patient. Many heart surgeries, for instance, that formerly required cracking the patients chest can now be done between the ribs.
For the government to assume that all companies can automatically add on new taxes to their cost structure without effecting their operations is foolish.
The tax issues are secondary to how ObamaCare will stifle innovation and consequently make people die and suffer unnecessarily.
The real problem is that once the government controls insurance coverage, it will find new and innovative treatments, equipment, drugs, etc. too expensive on a cost-effectiveness basis, and will not approve them for coverage. Innovations will die for lack of a market that would get them started and let them grow to where costs come down and clinical value is established. The phase where something is more than experimental, and therefore covered by insurance, and widely accepted and teh cost comes down, will become an unbridged chasm. A bit of that and potential innovators will see the handwriting on the wall and redeploy their assest and efforts into other fields.
This will happen even without the device tax, or any other tax. It is the natural and NECESSARY consequence of making health care part of the government budget and having it compete on cost-benefit grounds determined not by patients, providers, and healh insurers competing for business, but by OMB types with a zillion other, more pressing and immediate concerns.
Almost all medical innovation comes from the United States, and the rest of the world free-rides on us. As we model our system after theirs, our innovation will die, as well. There may be a few niches for politically popular diseases (AIDS? breast cancer? Sickle-cell?) where the government won’t dare to say “No,” but each time it caves in to that kind of pressure, coverage for less “popular” conditions will fall that much more—because in the short run it’s zero-sum, and to government budgeteers and the pols whom they serve, there IS no long run.
There’s another risk to innovation that the article doesn’t cover. The death panels.
New devices/drugs/procedures are always more expensive than existing products. If the new products prove themselves, they are more widely adopted, then prices start to fall.
The death panels, in the name of cost containment are most likely to refuse to permit newer, more expensive treatments.
This increases the risk of developing new products. You don’t know if they will be rejected.
A related risk, is the inevitability that the death panels will be corrupted by the big players in the market. They will ensure that the insiders products will be approved, and everyone else’s will be rejected.
As a medical device manager, I’d like to add the following point to Dr. Hsieh’s op-ed. It is not just small companies that will be affected by the excise tax (which is thankfully “only” 2.3%… earlier versions of ObamaCare had the figure higher). Many large companies that produce ‘low-tech’ med tech, such as scalpels, hospital beds, etc, operate on razor-thin profit margins, making their money via selling in volume. Even high tech companies that are operating on higher profit margins are not immune to the effects of this legislation. Bill Hawkins, the CEO of Medtronic (one of the largest medical device companies in the world) has said that ObamaCare would mean a loss of jobs at his company.
When you bring together 2 cabals – one that believes that humanity is destroying the beautiful earth and needs to be reduced to just enough slaves to maintain elite lifestyles and another that is firmly convinced that Middle Class White People are the Children of Darkness upon whom all brown-skinned people owe the revenge of humiliation, slavery, and abject poverty followed by genocide you end up with what we have now:
A government bent upon confiscating the lifeblood of much of the population while insuring their submissive servitude, removing their ability to reproduce, and then condemning them to an early death.
There is a term for the overall policy being introduced against us….
…ETHNIC CLEANSING.
Can tell that this site is inhabited by a bunch of anti health care reformers but, honestly, ask yourselves if the status quo was so great. 17% of the GDP going to disease care. Major health outcomes mediocre compared to the rest of the developed world (ie lifespan, infant mortality…). 40 million Americans without healthcare due to lack of insurance, leading to, by conservative estimates, some 30,000 preventable deaths annually (eg 10,000 West Virginia coal mine accidents per year). Insurance company peons making decisions about what care you or your family gets rather than you and your doctor.
We regularly hear this same argument from the pharmaceutical industry, that they have to charge American customers such high prices to fund their research and development. BS! Their marketing budgets far exceed their R and D…
Ok Doug, how many times do ‘we’ have to say this? We are NOT against reform. We are against Obamacare because it is not REFORM.
BTW, I used to work for an ad agency and yes, it is true, the pharmacuetical industry spends obscene amounts on marketing.
And what does health care reform have to do with mining accidents anyway?
Eva,
Not reform? Let’s see – requiring insurors to cover everyone in spite of preexisting conditions, requiring everyone to take the responsibility to have health insurance, assisting those whose income is inadequate to purchase said insurance, covering dependent children to age 26, 100% coverage for preventive care… What do you want? A single payer system?
About the mining accident in West Virginia – I would guess that most of the country was outraged and horrified by the preventable death of those 27 miners and feels enormous sympathy for their grieving families. Yet the end result of 40 million Americans without healthcare due to lack of insurance, by conservative estimates, is some 30 thousand preventable deaths. Shouldn’t we feel equally outraged?
Everyone -
Welcome to the world of “Socialized Medicine” – The ULTIMATE “Devil’s Bargain.” In the days of Jack Benny – “Your Money or Your Life” – was a joke. No Longer. Beyond that, and I live in a heavily “Black” area that is still “Tribally” Proud about Pres. Obama, as I would have been by a Vice President Lieberman – I ask one question, and one only – when you wake up in the morning, and go to work, do you expect to be paid or “Take one for the Team? So far, the answer has been healthy – I WANT TO GET PAID! – LIKE NO KIDDING!
Journey of Thousand Miles starts with “Single Step.” -S-
Revise and Extend -
And, To Date they don’t believe that the increase in price on Alcohol, Beer and Cheap Vodka – and Tobacco – Mainly Cigarettes, mainly Newport – are a product of their “Victory.” When they figure it out, they will be like Russian Peasants were after the Bolshevik Revolution – Pining for “The Days of the Czar and Pork – IF THEY ARE ALLOWED TO FIGURE IT OUT! -S-
Stifling innovation to limit medical advances certainly will cost lives, as any normally intelligent grownup can figure out. So this latest travesty is intentional. It’s Obama’s goal. This fraudulent Kenyan imposter is out to kill us.
you know its interesting that there is no mention of the rate of medical advances anywhere in the article, present or past, only analogies to computing power which force speculation for medical advances.
What about promoting cheaper solutions for current problems. For example, there is currently a drug for MS completing its second phase of trials, already proving that it is about 50 to 60 % more effective then the current practices. where does this funding come from.. the government (just like a lot of the funding for innovation, 1/3 of all money spent in the US for such purposes comes from the government, and do you know why. because the companies that would eventually produce such drugs want no part of it because it would be too cheap once on the market place and wouldn’t make as much from sales as the less effective more expensive alternative. How do i know you may ask, me roommate is an actively conducting this research.
oh and i think it is ridiculous to think our president is TRYING to destroy as much of the country as possible. and no i am not an Obama supporter, only trying to obtain the most balanced, unbiased view on the subject as i can form MY OWN opinions, unlike some who regurgitate the ridiculous crap fox news spews.
While im not arguing that this health reform is whats best people need to stop it with the “tunnel vision” of anger