This is one I haven't seen... making healthcare more affordable by increasing the cost of healthcare.
Obamacare will tax 2.3% of medical device revenues, not profits. Anyone with basic business/economic/accounting understanding knows that if you increase the cost to do business, you increase the cost of the final good or service.
http://online.wsj.com/article/SB1000087 … 87070.html
Due to Obama-care those businesses will have a lot more clients, due to having more clients they will make more money and thus they do not need to raise their prices.
Additionally this price will be passed not to the consumer but to the insurance companies which have inflation limited premium raises. Basically the Insurance companies and the manufacturers will share the cost, mainly the insurance companies and they are making more profit due to more business due to Obamacare so that's OK.
Yeah, right. You really think you can increase the cost of each unit produced, and not influence pricing?
The price will be passed to the consumer. It alway is. If you pass it to insurance companies, but don't allow them to adjust their pricing, then you will cause layoffs or bankruptcies(insurance companies don't make a very large profit margin.
Inflation-limited premium raises is just a whole 'nother stupid idea. Price ceilings never work, and ALWAYS have unintended consequences.
The price CAN'T pass to the consumer for anyone who is insured (vast majority of people after full implementation) so you're initial claim is misleading at best.
The insurance companies have a ton more customers which means they can bear slightly smaller profit margins because there are more profits there won't be layoffs or shut downs because demand just went way up for insurance and indeed the opposite is already happening with amny jobs being created in the industry.
You really don't have anything here.
Yeah, just shovel all extra costs on the evil insurance companies, because they make a ton of money. Right?
Try harder.
The insurance companies revenue is expected to rise significantly due to Obamacare, already new branches are opening and more staff are being hired, they are going to win out from Obamacare and some of that extra revenue will be taken by the measures you mention.
The insurance companies will make more money.
Still got nothing.
You think they are going to win?
If they can only increase their prices at the rate of inflation, and healthcare costs rise at double the rate of inflation, how is that supposed to work?
Cost of healthcare inflation not inflation in general.
Ok.
So, the price of devices goes up. That factors into the increase of the cost of healthcare.
Since the price of devices goes into the inflation of healthcare costs, then the insurance companies increase their premiums to keep up.
In other words, the prices just got passed to the consumer. Wonderful how that works, isn't it?
Nope taxation costs are excluded. Amazing that people can think of all this huh?
And then you are back to price ceilings.
Go do some study on the effect of price ceilings. I can promise you, there are always negative consequences.
Also, I'm just taking it that you are correct with all these claims, as I don't care to spend all my time wading through that atrocious bill.
In a vacuum yes, when the price ceiling is compensated by increased demand NO.
Broad generalizations aren't going to get you anywhere either. It was you who was demanding dealing with it specifically of Quil earlier.
The insurance companies get more customers therefore more $ taxation will cost them some $ the result is not negative. Even a child can do this and the profit margins and stock improvements show very clearly that the insurance companies are not suffering.
Healthcare S&P is doing four times better than General S&P.
It isn't that simple, though. Thirty million more people who were not insured will increase the demand for medical devices.
It will vary for each business, but medical device makers could easily maintain or increase their gross profit due to the increase in volume of sales.
Do you know what happens to prices when you increase demand?
So, you have rising direct prices, and rising indirect prices. Liberal logic ftw
Again, way oversimplified. Jaxson logic ftw
Edited to add: I do not represent all liberals so to describe my personal views as "liberal logic" is, well, illogical.
Nah, I'm calling it liberal logic because many parts of the bill are liberal logic.
Ok, so tell me. How does increasing the price of a product, and increasing the demand for that product, reduce prices?
I'm not saying the companies might not make more money. That's not the point. The point is the effect on healthcare prices. Both aspects are processes that increase prices, so why is this a good thing?
I was responding to your initial, simplistic statement that "Anyone with basic business/economic/accounting understanding knows that if you increase the cost to do business, you increase the cost of the final good or service."
If companies are making more money, they don't "have" to increase their prices, do they? I'm not saying they won't, but you make it sound like a given when there are many factors that go into that decision.
General practice is not to decrease your price per unit with each extra unit sold.
Suggesting that a TAX on equipment, and an increase in DEMAND for equipment will lower prices is doubly-counter to basic economic principles.
Let's use 4% profit, for $100,000 machines. It costs $96,000 to make the machine, and $4,000 is profit. A company sells 100 of those machines, and makes $400,000 per year.
Now, add a 2.3% tax, and increase sales by 50%(sales are not going to go up by 50%). Now each machine costs $98,208. If the company sells 150 machines for a $1792 profit, they end up with $268,800 in total profit, for 50% more work.
Do you think that is what they are going to do?
What about companies that only have a 2-3% profit margin already?
It's simple, the costs will be passed to the consumers, just like they always are. Every tax on every business is paid by the consumers. Every tax, period, is paid by the consumers.
You are not looking at the big picture. The tax is part of an overall plan that will lower health care prices for consumers. In fact, according to the Center on Budget and Policy Priorities, spending on taxable medical devices represents less than 1 percent of total personal health expenditures, so a small increase in their price would have an almost imperceptible effect on health insurance premiums.
Like I originally said, you are oversimplifying a very complicated set of factors, and making arguments that only consider a tiny part of the big picture. People smarter than you or me took the time to figure it out. This issue is only now being revisited because of lobbying from medical device makers. Evan Bayh is working for a lobbying firm that represents several medical device companies, and most of the senators who suddenly support repeal of the tax are from states with large medical device makers.
No, PP, you are ignoring the details, and trying to change the subject to 'the big picture'. The topic at hand is the taxation of medical devices. Taxing medical devices will not lower healthcare costs in any way, shape, or form. They will increase costs.
If you disagree, then please explain how increasing the cost of a good will decrease the cost of that good.
Did I say this would make total healthcare costs skyrocket? I said it would increase costs, and it will.
Hi Jaxson.
Nearly all manufacturing operations are subject to a Cost:Output relationship called Economies of Scale (EOS). Simply stated, as output increases, cost per unit decreases. As stated by Investopedia, "This means that as a company grows and production units increase, a company will have a better chance to decrease its costs." {1}
In the over-simplified example suggested, the 4% profit margin is very unrealistic but I will stick with it for now.
Increasing output from 100 machines to 150 machines will trigger Economies of Scale with the potential to reduce the unit cost from $96,000 to $86,000 each. Now each machine costs, if you include the 2.3% tax, $86,000 plus $2,300 (2.3% of the $100K selling price), or $88,300. Thanks to EOS, the manufacturer realizes an $11,700 profit per unit ($1,755,000 in total Profit) after the increase in business and the 2.3% tax. Not a bad deal for the manufacturer!
In summary, taking your model into the realities of EOS and the new 2.3% tax:
Production increases from 100 to 150 units.
Selling Price per machine rises from $100,000 to $102,300.
Profit margin per machine rises from 4% to 11.7%.
Cost per machine declines from $96,000 to $88,300.
Net Profit per machine rises from $4,000 to $11,700.
Stockholders are rewarded with a huge dividend.
CEO takes the credit for the windfall profits.
Production workers increase by 30% to meet the new demand.
{1} http://www.investopedia.com/articles/03 … z28qzBu6eH
Quill,
First, your reduction in price is just a number. My increases in price are factually based in hard numbers.
Second, you also ignore diseconomies of scale. We can throw out numbers until we are blue in the face, but there is no way to even get close to real EoS/DoS numbers without a huge undertaking of analyzing the financial/managerial/assets/procedures/etc of a specific company.
Thank you, Jaxson. At least now you can see that your model and your argument are flawed.
Sorry Quill... a 10% increase in demand is not going to offset a 50%-75%(or more) addition to taxes paid.
Economies of Scale is not going to make up for that.
Sorry Jaxson. I never said " a 10% increase in demand is not going to offset a 50%-75%(or more) addition to taxes paid." You must be thinking of someone else!
The 50-75% addition to tax is what is going to happen. That's just basic math.
The 10% increase is probably pretty close to what is going to happen. Let's call it 30 million Americans out of 300. Close enough.
So, do you have a problem with either one of those numbers?
"First, your reduction in price is just a number. My increases in price are factually based in hard numbers."
LOL, I wonder how many examples of Jaxson's oversimplified story problems that use hypothetical numbers we could find on the Hubpages forums, including this thread?
"The topic at hand is the taxation of medical devices. Taxing medical devices will not lower healthcare costs in any way, shape, or form. They will increase costs."
The taxation of medical devices is part of an overall package that reduces health care costs in the long run.
"If you disagree, then please explain how increasing the cost of a good will decrease the cost of that good."
I did not say that. I said that the increasing the cost of a good does not always result in an increase of the price of the good.
"Did I say this would make total healthcare costs skyrocket? I said it would increase costs, and it will."
I did not accuse you of saying it would make total healthcare costs skyrocket. You said it would increase the cost of the final good or service. I do not think that is necessarily the case and neither do the professionals at the CBPP who evaluated the tax increase as part of the overall impact of the ACA.
The taxation of medical devices is the topic.
No matter what else the bill does, this aspect of it raises prices.
It pretty much does. I know 2.3% doesn't sound like much, but for a company that operates on a 4% profit margin, and already pays 20% in taxes, that is like raising their tax rate to 77.5%!
Ok, forget this bill ever happened.
Now, say we are going to tax medical device companies at over 75%. Do you think that will increase costs?
NO the topic is this will cause the cost of healthcare to go up. It absolutely CAN'T.
End of discussion.
The rest of the bill did happen and it's relevant because it contains provisions that affect the result of this tax, looking at it out of it's proper context is pointless.
Ok, I see.
We increase the costs of goods and services, but say the service providers can't increase their prices?
Yup, price ceilings always work.
Stop ignoring the most basic facts, willfully ignoring. It's dishonest. The insurance companies just recorded their best quarters in decades, the insurance companies just got huge additions to their customer base from this legislation, in return they have some extra costs and regulation and the insurance companies are thriving.
You haven't got anything on this one.
http://www.bloomberg.com/news/2012-01-0 … boost.html
Lol.
"Insurance companies are doing better after the recession than they were doing during the recession."
Hey, I have an idea. If you are so concerned over 6-8% profit margins, why don't you open up competition across state lines, to get insurance companies competing more with each other? We could drop the cost of insurance a good 4-5% if we get them competing.
It is an excise tax on the manufacturer's that should bring in over 20 bill over 10 years. proponents actually say that device makers will reap more profits with 30 mill new customers. Retail devices sold directly to consumers are exempt and manufacturers that bring in under $5mil a year are also exempt.The CBO did say they expect at least some of the cost to be passed on to consumers
A 2.3% tax on a company that has a 4% profit margin is like adding over 50% to their effective tax rate.
It's not going to increase revenues.
Now, Jaxson, it I that must remind you that your 4% profit margin is a fictitious, hypothetical number. I wonder why you treat the numbers in you rhetorical model as real but cast aside figures in other models as “just a number?”
4-6% is a good average profit margin for medical-related industries.
Also, using 4% is a nice benchmark to consider how something would affect smaller businesses, as their profit margins tend to be lower.
Back again, Jaxson. Boy, do I admire your persistence!
It seems you know very little about manufacturers of Medical Equipment. Here is a list of 71 companies in the industry and their profit margins:
1 = 5%
2= 14-15%
8= 20-29%
12 = 30-39%
4 = 40-49%
44 = 50-91%
http://ycharts.com/rankings/industries/ … &d=asc
Furthermore, smaller businesses require larger profit margins to survive than do bigger companies.
The business model you suggested as an argument against the 2.3% tax is unrealistic, inaccurate, impractical, and, I am really sorry to say, not very useful.
Bottom line, the companies will be getting these taxes and they will not eat them, they will be passed on to consumers.
The assumptions made are all of increased revenue and therefore the company can eat the increase. The numbers tossed around are all guesses. There was on that claimed increase in production would save $10,000 in their example. But there are elements not taken into account when everyone talks of growth and additional profits, and that is additional costs. More sales means more product needed, which means more employees and the costs associated with them. The extra growth could mean they outgrow their production and warehouse facilities. So they need bigger building and all the increases associated with that like higher rent, higher property taxes, higher insurance, utility bills and so on.
We have already seen dramatic increases in insurance premiums since Obamacare started and att the taxes and regulations are not in place yet. Wonder how much higher they will go? Not to mention all those who have already lost insurance.
"Earlier today, the Congressional Budget Office (CBO) released an updated cost estimate for Obamacare that showed that the law will cost less over 10 years than last predicted—because fewer people will be covered.
Now, although Obamacare spends more than $1 trillion, CBO predicts it will leave 30 million Americans uninsured, falling far short of what was promised.
Obamacare will cost less… The new CBO scoring shows that the net cost of Obamacare will be $84 billion less over the next 10 years than predicted in its last analysis in March 2012. Spending on the Medicaid and the Children’s Health Insurance Program expansion will fall by $289 billion, while increased spending on the exchanges to cover some of those who will no longer qualify for Medicaid will cost $210 billion. The law will now add $1.17 trillion in new government spending over 10 years—paid for by massive tax hikes on all Americans and robbing money from the Medicare program
http://blog.heritage.org/2012/07/24/cbo … -decision/
Hi, AV. Thank you for the latest spin from the Heritage Foundation regarding the ACA. I read your article and then read the CBO report to learn the facts first hand for myself. Allow me to point out what your source intentionally left out of their article.
The law will NOT add $1.17 trillion in new government spending!
Not only has the 10-year cost for the Insurance Provisions in the ACA gone down by $84B to $1.17T but also this is NOT new spending nor will this cost result in tax hikes. The CBO report re-iterates that Obamacare pays its own way and actually REDUCES the national debt over the next decade. “CBO and JCT now estimate that the insurance coverage provisions of the ACA will have a net cost of $1,168 billion over the 2012–2022 period—compared with $1,252 billion projected in March 2012 for that 11-year period—for a net reduction of $84 billion. (Those figures do not include the budgetary impact of other provisions of the ACA, which in the aggregate reduce budget deficits.” {1}
{1} http://cbo.gov/sites/default/files/cbof … mates.pdf, p.2
Back again, AV.
In a classically pessimistic view, you point out that the glass is not empty. Before the ACA, 60 million Americans were expected to be without healthcare insurance by 2022. Now, as a direct result of the bill, 30 million, that is one-half, AV, will be insured due in part to the mandate, government assistance, and access to exchanges established under this bill. {1}
Why less than promised? The Supreme Court ruling allows states to opt out of expanded Medicaid thus reducing the projected number of insured Americans. As noted by the CBO, “As a result of the Court’s decision, CBO and JCT now anticipate that some states will not expand their programs at all or will not expand coverage to the full extent authorized by the ACA. CBO and JCT also expect that some states will eventually undertake expansions but will not do so by 2014 as specified in the ACA.”{2}
Those remaining uninsured will consist of unauthorized immigrants, those eligible for, but not enrolled in, Medicaid, and greedy, self-serving individuals who can afford the premiums but refuse to join all the other insured Americans looking to spread all the risks over a larger pool. To their benefit, the IRS penalty/tax of $695/year is the biggest insurance bargain ever conceived.
{1} http://cbo.gov/sites/default/files/cbof … mates.pdf, Table 3.
{2} Ibid, p.2
More employees, more facilities, etc.....Sounds like more JOBS! You can't have it both ways. More jobs always means more cost, more demand for a product that equals the supply creates balance. The free market works the same way? Insurance premiums will continue to rise anyway. I will look up this report you are speaking of from the CBO, but the link I provided above explains how "getting rid of Obamacare" adds to the deficit.ie..Paid for by China.
Even business gets taxed. I don't see any different between taxing a farmer, a lawyer, a contractor, or a medical device maker.
http://www.cbo.gov/publication/43082, http://www.cbo.gov/publication/43080 The link you provided is a blog from the right, these are the facts from the government documents.
Tammy,
The first link you provided said no page found. I did read the second link. I take from your statement and if I am wrong I apologize, that you blew the link off I provided and never read it. Shame, for if you did you would have realized the report you cited was an outdated report, Pre- Supreme Court decision. The link was a CBO report of revised numbers post Supreme Court decision showing the changes of cost and amount of people that will not be covered.
http://www.cbo.gov/publication/43472 I apologize for sending the link that wasn't updated, this one is. Yes I did read the link you sent, even though I recignize the name of the organization to be a right wing organization. I'm not sure what happened to the other link I will check it and try to fix that one as well
Were you talking about my first link earlier in the conversation, "The letter to Bahner(sp)"? it worked for me?
Hey Quill, haven't had time to reply to your post.
You're kind of right... I was thinking of the medical equipment industry which runs under 4% margin. Medical appliances averages 13%, but that's still like adding 18% to a companies taxes. The simple fact is, it increases costs, which will be passed on, and I also disagree with the thought that we should tax different industries at different rates.
by Scott Belford 10 years ago
By the time the dust settles, there will be more than 7 million paying enrollments into the Obamacare program through the Federal, State, and off exchanges. It also appears that the mix of young and old, while not ideal, may not be too bad; although that remains to be seen.What does it mean...
by Sue B. 10 years ago
How is the Affordable Healthcare Act known as "Obamacare" actually raising healthcare costs?I have been hearing those arguing against the Affordable Healthcare Act state over and over again that this act is raising healthcare costs. I have not found how the act is directly...
by Judy Specht 7 years ago
I have been listening to how the government has a billion dollars for getting people to sign up for the Affordable Healthcare Act. Would that money have been better spent training more doctors and building new hospitals? New Jersey has closed how many community hospitals in the last few...
by Brian 12 years ago
This may not be news to a whole lot of people, but, I am getting sick of this. Why isn't the Government doing anything about it, especially when they know that it is killing our economy? Not, to mention that we are fighting wars over it, only to have the countries we are "Aiding" are...
by Mentalist acer 13 years ago
Will the new healthcare policy personally help you,and just exactly are the drawbacks of the healthcare bill?
by SparklingJewel 14 years ago
I truly want to know if these are valid reasons...or are they perspective on what "could" happen, or just totally absurd possibilities. If you have proof to validate or deny these reasonings, I genuinely would like to hear them?Here are just some of them, from a conservatives view: ...
Copyright © 2024 The Arena Media Brands, LLC and respective content providers on this website. HubPages® is a registered trademark of The Arena Platform, Inc. Other product and company names shown may be trademarks of their respective owners. The Arena Media Brands, LLC and respective content providers to this website may receive compensation for some links to products and services on this website.
Copyright © 2024 Maven Media Brands, LLC and respective owners.
As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.
For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy
Show DetailsNecessary | |
---|---|
HubPages Device ID | This is used to identify particular browsers or devices when the access the service, and is used for security reasons. |
Login | This is necessary to sign in to the HubPages Service. |
Google Recaptcha | This is used to prevent bots and spam. (Privacy Policy) |
Akismet | This is used to detect comment spam. (Privacy Policy) |
HubPages Google Analytics | This is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy) |
HubPages Traffic Pixel | This is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized. |
Amazon Web Services | This is a cloud services platform that we used to host our service. (Privacy Policy) |
Cloudflare | This is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy) |
Google Hosted Libraries | Javascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy) |
Features | |
---|---|
Google Custom Search | This is feature allows you to search the site. (Privacy Policy) |
Google Maps | Some articles have Google Maps embedded in them. (Privacy Policy) |
Google Charts | This is used to display charts and graphs on articles and the author center. (Privacy Policy) |
Google AdSense Host API | This service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy) |
Google YouTube | Some articles have YouTube videos embedded in them. (Privacy Policy) |
Vimeo | Some articles have Vimeo videos embedded in them. (Privacy Policy) |
Paypal | This is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy) |
Facebook Login | You can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy) |
Maven | This supports the Maven widget and search functionality. (Privacy Policy) |
Marketing | |
---|---|
Google AdSense | This is an ad network. (Privacy Policy) |
Google DoubleClick | Google provides ad serving technology and runs an ad network. (Privacy Policy) |
Index Exchange | This is an ad network. (Privacy Policy) |
Sovrn | This is an ad network. (Privacy Policy) |
Facebook Ads | This is an ad network. (Privacy Policy) |
Amazon Unified Ad Marketplace | This is an ad network. (Privacy Policy) |
AppNexus | This is an ad network. (Privacy Policy) |
Openx | This is an ad network. (Privacy Policy) |
Rubicon Project | This is an ad network. (Privacy Policy) |
TripleLift | This is an ad network. (Privacy Policy) |
Say Media | We partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy) |
Remarketing Pixels | We may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites. |
Conversion Tracking Pixels | We may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service. |
Statistics | |
---|---|
Author Google Analytics | This is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy) |
Comscore | ComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy) |
Amazon Tracking Pixel | Some articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy) |
Clicksco | This is a data management platform studying reader behavior (Privacy Policy) |