As a follow up to some comments in another discussion, we asked DeRoyal President and COO Bill Pittman to comment on rumors of layoffs related to the medical device excise tax implemented by the health care reform bill. Here's the response we received by way of DeRoyal's VP of HR:

"The medical device tax constitutes the largest cost increase DeRoyal has experienced in its 40-year history. We are working to mitigate this impact in a number of ways from both a revenue and cost perspective. Even in the face of this challenge we are doing everything within our power to preserve US jobs in this incredibly difficult economic environment."

(signature)

Bill Pittman, President & COO
DeRoyal

(PDF...)

DeRoyal Industries, based in Powell, is a manufacturer and worldwide distributor of health care equipment and products. DeRoyal has over 2000 employees in 26 states and five countries, with approx. 300 employees locally.

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billy's picture

nice. . .

Great result for Obamacare - the national tax that forces us all to pay more for health insurance to insure illegals and people who made a conscious decision to not buy insurance.

My dear God - you people are absolutely insane.

bizgrrl's picture

Taking the name of our lord

Taking the name of our lord in vain? You broke a commandment. We plead for your forgiveness.

R. Neal's picture

Idiocracy was pretty funny.

@"billy": Idiocracy was pretty funny. Until it started coming true.

cafkia's picture

Hey Billy, hows about you

Hey Billy, hows about you tell us where you live so that we can have a place to stack the bodies of all of the illegals and irresponsibles who die because they do not get the healthcare they so obviously do not deserve.

That is going to be a problem isn't it? If you do not treat them, and their families and/or friends and/or whoever willnot/cannot bear the cost of their embalmment, incineration or burial, they will have to be placed somewhere in a way that the public will not be sickened or offended. Of course, that has to be done at no cost to the public as well. How might that be accomplished?

The truth is that while the Affordable Care Act is a very flawed piece of legislation, there may well be no perfect solution. The cost of removing all of the so-called illegals would have to be born by the public and would likely result in a tax increase. Burial and/or other post death fees for the sick and injured would have be born by the public (and currently are). We should probably talk about the massive hit to our economy that we would take if suddenly a significant percentage of the folks who pick fruit and vegetables, process slaughtered animals, and do bunches of other jobs Gawd-fearing Ammur'kkkans are just too damn good for, were to not be there doing the work. I know, I know, you are going to say something about forcing welfare recipients to do the work. Do you really want to consume food processed by folks who do not want to be there doing that?

If you have a perfect solution, one that will cost no money and produce no widespread health issues, one that will not have a ginourmous deleterious affect on our economy, please, do not keep it to yourself. Anxious liberals await education.

Walt's picture

Medical device penalty/tax

Pushing the argument a little bit, aren't you?

cafkia's picture

I'm pushing the argument?

I'm pushing the argument? No, the push is coming from people who apparently believe that you can take actions that have no reactions. The push is coming from people who apparently believe that there are actually things conservative government can do that do not cost anything at all while at the same time believing that anything liberal government does is exorbitantly expensive.

What I try to do is look at the big picture. What I try to do is minimize the the effect of the Law of Unintended Consequences. What I try to do is take an intelligent approach to understanding the problem. I suppose I can understand why republicans don't like that.

In any system, physical or cultural or whatever, it takes an input of energy to change the velocity or direction. The greater the change desired, the greater the energy required. It will cost to remove the immigrants. It will cost to begin a program to ignore the medical needs of the immigrants and/or the poor. Again, if you know a way to circumvent this apparent universal law, enlighten a brotha.

Joe Williams's picture

where to stack the bodies?

after a few illegals are refused care so citizens get what they paid for, i suspect they would find their way back to there legal home.
if not, natural selection in progress
or are you evolution deniers too?

Somebody's picture

after a few illegals are

after a few illegals are refused care so citizens get what they paid for, i suspect they would find their way back to there (sic) legal home. if not, natural selection in progress or are you evolution deniers too?

Ah yes, here we have the charming Republican platform item that offers a glib and callous disregard for pesevation of the lives, health, or well-being of those who are poor, brown, yellow, or black, or any combination of the above. Unless, of course, they are in utero. In that case, they must be looked after under all circumstances and at all costs (except for prenatal care that might also benefit their shiftless, slutty mothers). Once they're born, however, let's just deport, deny, and look away as the die in the gutter. They'd just be sure to get the kids dressed and off to the Academy and mow the lawn first.

mreed's picture

a perfect solution

Nancy Pelosi & His Obamaness (your spokespersons) told us repeatedly that ObamaCare IS the perfect solution. Now you're taking it back? Let's stick with the "flawed" system we have now, until Reasonable People who can actually add & subtract do better, because I've not witnessed any piles of dead illegals or poor people around to date. Have you, you sanctimonius statist twit?

R. Neal's picture

"Obamacare" is not perfect

"Obamacare" is not perfect and it is not "Obamacare."

Obama campaigned on a public option and no mandate. We got a mandate and no public option, thanks to health insurance company lobbying on both sides of the aisle.

HR676 is a better plan, but we don't have the political will to do it.

But even a single-payer national health insurance program will not fix one basic problem. We spend more (for lower quality) than just about anybody. Last time I checked it was more than $7000 per man, woman and child in the U.S.

So if we had a "perfect" insurance plan that works how insurance is supposed to work and every U.S. citizen was in the pool, insurance for a family of four would cost $28,000. (Maybe a little less because we would reduce some overhead and eliminate insurance company corporate profits and executive bonuses.)

So getting costs under control is the biggest challenge, regardless of the system. Maybe we should start with $7500 Medicare scooters and $500 crutches and the shysters who sell them.

Crowley 's picture

Darn

Darn. DeRoyal just announced its knitting operations are moving to Guatemala.

Somebody's picture

Your premise is wrong. Obama

Your premise is wrong. Obama and Pelosi never claimed the healthcare act is the perfect solution. As recently as his comments following the Supreme Court's upholding of the law, President Obama mentioned that legislation to further improve the law should be discussed and passed. Ergo your premise is wrong.

P.S., much has been made recently about Republicans (particularly M. Romney at the NAACP) labeling the healthcare law as "Obamacare," with the inference that it's disrespectful to the President. While acknowledging that that is indeed the Republicans' intent, I believe the President has instead chosen to wear the moniker as a badge of honor. In truth, as the bill is implemented, more and more Americans will come to realize that it is a significant improvement. Really, it's not hard to imagine some future tea party activist protesting another improvement to the law by holding up a sign the reads Keep your government hands off my Obamacare!

Michael Brand's picture

Hey cafkia, how about you...

How about you telling us all where were all the bodies of the illegals and irresponsibles were stacked who died in the last 20 years because we didn't have Obamacare?

Kirik's picture

Um...

Evidently cafkia hasn't heard of EMTALA, Ronald Reagan's baby. That's why the streets aren't littered with the bodies of dead illegal aliens. It's also the reason that ED's are getting overrun with illegals in the waiting room.

metulj's picture

Another talking point

Another talking point foisted.

aelfheld's picture

Simple solution? Get rid of

Simple solution? Get rid of all government-funded health insurance / health care. Medical costs didn't reach the stratosphere until the government got into the act. And as countries with government-run health care show, once they take the whole thing over, from delivery to payment, the results are horrid.

metulj's picture

When FoxNews fits you for

When FoxNews fits you for your snout ring, do they use novocaine or do you go commando?

fischbobber's picture

The classical logical fallacy.

A preceded B, therefore A caused B.

Should we outlaw the automobile as well since healthcare didn't reach the stratosphere until we all got cars. It also didn't reach the stratosphere until Tennessee issued concealed carry permits. Should we outlaw guns as well? The list goes on forever when one argues with idiots dude.

redmondkr's picture

No, insanity is doing the

No, insanity is doing the same thing over and over again and expecting different results. (Albert Einstein)

aelfheld's picture

So getting the government

So getting the government even further involved in health care is insane?

Factchecker's picture

I'm just glad we had a

I'm just glad we had a healthy debate between implenting "Obamacare" or the GOP's alternative they keep talking about wanting, the one they pushed so hard for when they had both houses of Congress under W the pReZnint, whom they'd rubber-stamp anything for.

Oh? You don't remember that either? Yeah, that.

FarNorthCA's picture

Who thinks that the

Who thinks that the government should even be doing this...oh, you, right.

redmondkr's picture

Yes, That's Correct

BooMushroom's picture

What forest? All I see are trees!

"The push is coming from people who apparently believe that there are actually things conservative government can do that do not cost anything at all while at the same time believing that anything liberal government does is exorbitantly expensive."

There is something that government can do that costs nothing: get the fuck out of my way, and leave me alone. The liberal government would tax everyone at a rate of $600 a month to provide everyone with $300 a month in food.

If a conservative government wanted to reform the healthcare system, they could do it easily, without trampling the citizenry. Forcing doctors to post pricing for procedures, so people can control their costs Limiting malpractice awards, so doctors can spend less on insuring themselves against their customers, and spend less on "defensive medicine." Facilitating interstate trade of medical insurance, so people can choose the least expensive plan that will meet their needs. . Creating an industry-wide standard for billing so the doctors would need less support staff to process insurance claims.

If someone can't afford comprehensive coverage, they can get a low-cost plan, which pays nothing on small claims (urgent care/optometrist) but pays the lion's share of catastrophic claims (cancer, surgery).

Whenever government subsidizes something, the price goes up. Witness housing, college tuition, etc.

R. Neal's picture

Back to the medical device

Back to the medical device tax, I'm still waiting for someone to explain why it can't be added onto the invoice like a sales tax or the federal excise tax you pay on your phone bill. The manufacturer (or importer) collects it from the buyer and remits it to the government. No price increase, no cost increase except for some incremental bookkeeping, no harm, no foul. Maybe it can't work that way, but no one has explained why.

And because access to affordable health care will expand, the manufacturers should see an increase in sales. Similar to how insurance companies agreed to minimum medical loss ratios, eliminating benefit caps and rescission, and requirements to cover pre-existing conditions. They just got the government to force people to buy their product, and for that they were willing to get some skin in the game. Plus they got millions of twenty-somethings added on to their parents' policies which is virtually free money they weren't getting before.

Clements's picture

Medical Device Tax

Here's my take on it: it will be added to the price but not initially. Let's say that DeRoyal has 5 primary competitors and it begins adding the 2.3% to its invoices on the day 1 of the tax. Maybe 3 of the competitors who have less market share than DeRoyal promote to DeRoyal's customers that they will not add the tax. DeRoyal loses market share that harms its bottom line. Remember collusion with competitors would be illegal so it can't tell its competitors that they'll add the tax if the competitors agree. DeRoyal could however unilaterally announce its plan to do so much like airline signal one another about fare hikes.

The uncertainty is what is causing concern. The company probably knows it will become part of the price but what it doesn't know is when.

As to the company, *if* what has been posted is true:
a. it is taking necessary measures to deal with its largest cost increase in history.
b. it acknowledged cutbacks rather quickly when asked by KnoxViews.
c. it stated that it was just cutting costs but also working on raising revenue.
d. it provided very generous severance packages.
e. it is freezing management pay while raising non-management pay.
f. it wins awards for "work-life" balance.
g. its philanthropy is exemplary.

Quite frankly, it sounds like a well-run business and one that I'm glad we have in East Tennessee.

Just my thoughts.

fischbobber's picture

DeRoyal

Over the board, the area is better off with DeRoyal as a corporate citizen than it would be if they weren't here. I'm not convinced that any market effects they are currently dealing with are directly attributable to The Affordable Care Act.

Clements's picture

?

Really, why?

fischbobber's picture

Why? Because of the evidence posted.

Everything posted here suggests the company is doing everything they can to retain production staff while restructuring its management team.

Furthermore, their market, though static, is not negatively affected by the Affordable Health Care Act, in fact, it would likely be expanded. If more people have access to ongoing healthcare, there is likely going to be an increased demand for their product.

One factor that these right wing Chicken Littles have ignored is that a larger market, with greater return to the consumer investment (remember the 85% mandate?) will dramatically increase the size of the market for products such as DeRoyals.

So why the tax? Because that's where a huge chunk of the money will go after the act is instituted. They can afford it.

Crowley 's picture

85%?

What's the 85% mandate? Is that the percentage of the population that will now have healthcare? Thanks!

fischbobber's picture

85%

It's the amount of your healthcare money that has to be spent by insurance companies actually providing healthcare as opposed to investing and management. It's one of the cornerstones of the legislation.

bizgrrl's picture

The State of Tennessee has a

The State of Tennessee has a 6.5% corporate excise tax on the net earnings from business done in Tennessee for the fiscal year.

Maybe companies based in TN should be protesting this tax. Or, are they able to avoid Tennessee's excise tax by showing no or very low net earnings?

R. Neal's picture

OK, I see one problem with

OK, I see one problem with treating it like a sales tax and adding it on to the invoice. It appears that most medical devices are paid for by Medicare and the VA. So it would be taking money out of one pocket and putting in another.

The simple solution, then, would be for the user/consumer to pay a copay equal to the tax. So a Medicare scooter that costs $5000 would cost the user a $115 copay (in addition to the 20% not covered by Medicare). Supplemental insurance could be expanded to cover the tax copay, similar to the 20% copay some policies already cover.

CJ's picture

Why is it an excise tax...

It's an excise tax so the tax remains hidden in the cost of the product so the end user doesn't see it. That way people get angry at the manufacturer for increasing costs instead of the politicians who are responsible for the increase.

metulj's picture

Yes. You get furious with the

Yes. You get furious with the manufacturer of the pacemaker that keeps you alive because of the price.

Big Al's picture

No, the purchaser does *IF*

No, the purchaser does *IF* there are less expensive options.

csm's picture

healthcare?

In what universe does it make sense to establish yet another unsustainable entitlement and ruin the best healthcare system in the world over what amounts to a very small percentage of people who don't pay their bills or buy insurance. There were/are a lot of other things that could have been tried first.

R. Neal's picture

a very small percentage of

a very small percentage of people who don't pay their bills or buy insurance

That "very small percentage" is 50 million uninsured. Many of those don't buy insurance because they can't, at any price.

metulj's picture

It's not the best healthcare

It's not the best healthcare system in the world. We rank behind every other industrialized nation that matters. Our vital indicators are hovering down around Eastern European countries. We have great doctors and care providers. The rest just sucks.

R. Neal's picture

I would also concede that the

I would also concede that the health care reform law is an overly complicated mess that does not solve all our problems.

Single-payer would fix most of it.

csm's picture

Yep, we are so "medieval"

Yep, we are so "medieval" that those who can come here for treatment do. As for the small percentage of those who can't get insurance at "any price", you fix that problem, you don't tear down the whole system. There will be many more people who are going to be unable to afford the mandated coverage defined by Obamacare, but then, that's the whole idea isn't it? Fill in the blank legislation should be unconstitutional but I'll settle for getting rid of anyone who voted for it.

metulj's picture

See my comments about great

See my comments about great doctors. MRSA infection rates, on the other hand, are just a skosh better than Cyprus and Brazil, and just a bit behind Latin America taken as a whole. But you know those are standards and only commies care about standards and what not.

R. Neal's picture

There will be many more

There will be many more people who are going to be unable to afford the mandated coverage defined by Obamacare

No one will be required to pay more than 8% of their income for health insurance. Those with income so low they don't pay taxes will not be required to purchase insurance.

csm's picture

So who takes up the slack?

So who takes up the slack? Surprise!!! The same people doing it now only at a higher rate. Come on people, who's going to pay the higher costs of medical devices and that new taxes on hospitals? The government doesn't have a source of revenue other than the taxpayers (and the printing machine), you do realize that, right? You guys have taken "promote the general welfare" to ridiculous lengths.

metulj's picture

So did you get your economics

So did you get your economics education from the History Channel or Dave Ramsey?

csm's picture

Any chance people getting the

Any chance people getting the Earned Income Tax Credit will take a small percentage less to cover their new insurance?

metulj's picture

Remember: it is class warfare

Remember: it is class warfare when people ask rich people to be means tested.

csm's picture

I'd rather have Mr. Ramsey

I'd rather have Mr. Ramsey running my check book than Mr. Obama. I don't have to have an economics degree to know that spending more than you make is a prescription for disaster. If being "fair" and bankrupt makes you feel better, knock your socks off, I'm going to do my best to change the people in D.C. that buy into this garbage.

metulj's picture

And a national economy has

And a national economy has very little to do with your income and balances. Very little. Do not confuse the simple that works with a solution for a complex set of relationships that can't even be modeled on a computer that handles the math for nuclear weapons.

csm's picture

Hey, if I could keep my

Hey, if I could keep my insurance policy, which is pricey, and not go on Medicare, that would be awesome. And trust me, I don't come close to qualifying as rich, even under the definition set by Mr. Obama.

metulj's picture

Right. I have no idea how old

Right. I have no idea how old you are, but your insurance policy will kick you to the bricks in due time. Or it will set a price that you couldn't afford. But that NEVER HAPPENS in the world's best healthcare system.

John Galt's picture

DeRoyal & Medical Device Tax

Hmmm. DeRoyal has quietly laid off a dozen people from its small corporate staff in the last few weeks. Seems an odd way to try and preserve American jobs.

metulj's picture

Turd. Floated.

Turd. Floated.

Crowley 's picture

Yes, but

According to my sister, they have beefed up their R&D staff by hiring nearly that many engineers this year as well as starting a program to hire fresh college grads.

Crowley 's picture

DeRoyal Pay Increases

DeRoyal has also frozen upper management pay but will be providing wage increases to non-management.

fischbobber's picture

Quality

t sounds like DeRoyal has recognized what unions have been saying for years and that is that quality translates into profit in the marketplace. It makes sense to focus your expenditures on the areas of your business that bring in the greatest return.

Crowley 's picture

Amen

Amen!

Crowley 's picture

By the way

A few years back, DeRoyal employees overwhelmingly rejected a huge union push. Opposed by ~86%. Sis says these folks are great to their staff.

fischbobber's picture

A few years back

Would this be about the same time that DeRoyal recognized the importance of their hourlies to their bottom line and began instituting progressive worker/management techniques such as flex scheduling and providing child care assistance?

I've had a front row seat to organizing efforts for thirty-five years. What makes or breaks companies is not whether or not the union is voted in or out, but rather how management reacts to the legitimate issues that bring the union in to organize to begin with.

Your condescending attitude would indicate either a total disregard for reality or an assumption that those you are in discourse with have a total disregard for reality.

Pete DeBusk did not get to where he is by being stupid.Let's examine this statement:

The medical device tax constitutes the largest cost increase DeRoyal has experienced in its 40-year history.

Unless one factors in the anticipated increase in business, this 2.3% tax would seem to be nothing more than a bump in the road. The size of the cost increase is relative only to the actual amount of business being done. In other words, DeRoyal expects to make a killing, and has learned from past labor negotiations that its hourlies will quickly figure this out, so he becomes proactive with their raise and holds off management bonuses until he's sure implementation of new market strategies work. He then has the freedom to reward bonuses based on performance rather than job classification. It all makes sense, but the arguments you have presented would insinuate the opposite of all this, namely that the Affordable Care Act is some kind of threat to DeRoyal. Pete DeBusk is going to make a killing off of this legislation.

Clements's picture

Not to beat a dead horse, but...

"Pete DeBusk is going to make a killing off of this legislation."

I don't see how you can so readily reach this conclusion. I don't recall the name of DeRoyal's competitor that was similar in size with a 0.8% margin but for argument's sake, let's say that DeRoyal does 5x better than this company and makes a 4% margin before income tax. If so, their margin drops to 1.7% after the new excise tax and *if* they are able to maintain that margin, DeRoyal would have to grow by >125%.

Exactly how can DeRoyal grow by 125% by having ~10-15% more population covered particularly when some percentage of the uninsured consume healthcare products and services now but the cost burden is shifted to those with insurance?

fischbobber's picture

Whoa!

Explain again why ReRoyal has to grow 125% to pay a 2.3% excise tax. You must be a banker.

Clements's picture

It's really quite simple.

The 2.3% excise tax is top line on revenue so it's $2.30 for every $100 of sales. If their profit was 5x the other, similar company (& that's probably a stretch), their profit is $4 for every $100 of sales. So for the same $100 in sales, their profit drops by 57.5% from $4 to $1.7. Assuming the same level of profitability, to get back to $4 profit requires $235 in revenue:

$235 sales x new margin of 1.7% = $4.

Not sure how their business will be affected by the European crisis (Euro is down to $1.22 now making DeRoyal products more expensive). If DeRoyal is terribly inefficient and has tons of excess capacity, new growth could result in a higher marginal profit as they leverage fixed overhead but I don't know about their efficiencies.

So in summary, how do they cut costs? Maybe they invest in more automation? Cuts labor force back. Maybe they move more production offshore? Cuts labor force back. Use cheaper materials? Diminishes brand equity. I doubt they are throwing a celebration party for this new tax.

fischbobber's picture

Well for the first 24 million

They restructured their office. (They eliminated 12 positions at a 50,000 dollar a year per savings. That's assuming these people made somewhat, though not a considerable amount over minimum wage.) Now is where it all gets fuzzy. They've covered themselves for the first 24 million and they've frozen management pat to cover at least the next 24 , but what do they do after the first forty-eight million dollars in excess revenue?

Clearly, once they reach fifty million in new revenue they must declare bankruptcy because you have learned backwards math. See they can't adjust pricing, or take advantage of increased efficiency of scale or do anything that businesses have done to survive since the bible began recording business practices. Because Breitbart said so, but Breitbart's dead.

I remember your argument from the nineties when Clinton negotiated the tobacco settlement and Phillip Morris dropped to 19.95 a share. I bought. I heard it again in 2008 about Ford at 2.15. I bought. If DeRoyal was a publicly traded company, it would probably be getting trashed right now. Wait, it's not a publicly traded company and you're trashing them anyway. These guys are fixing to clean up and if you don't get it, you don't understand markets.

There are going to be winners and losers as a result of this change, but I don't think DeRoyal is going to be a loser. They have been preparing for the Heritage Foundation change for quite some time. Now it's here. They will cash in big. Write it down and take it to the bank. Buy in if you can.

Finally, cutting costs is not the focus. The focus is making sure quality product is available regardless of how the buyers decide to purchase, i.e. just in time vs. inventoried.

I will leave you with a thought, not knowing if your purpose is to instill fear or if you are reacting to your own panic. Fear is a primary means of control. Buy low, sell high sounds easy until you practice it. You have to be strong enough to recognize what is going on and deal with reality while those around you are in a panic. Making money is not about political philosophy or right and wrong. Making money is about reading and reacting to the market. DeRoyal sells to a market that will exist regardless of any other factor. They do it better than most and they appear to be positioning themselves to be a player regardless of what happens. This company is fixing to make a killing. Write it down.

Frank's picture

Sorry, I don't follow / can

Sorry, I don't follow / can you explain your math? What do you mean they covered the first $24M?

fischbobber's picture

Office Restructuring.

2.3 percent of 24,000,000 is 552,000.

552,000 is pretty close to what DeRoyal's reported restructuring will save.

His management's pay increases have also been deferred for even greater market leverage. On the surface it would appear that not only is DeRoyal preparing for a price war, they may be in shape to win one.

Frankly, most of this discussion at this point is about data interpretation and manipulation. I wouldn't invest against DeRoyal, but I probably wouldn't work for him either. I look for him to profit greatly from the present situation. I would agree that he is an asset to our community. Does this cover everything?

Big Al's picture

Sounds like a well run

Sounds like a well run organization to me.

Crowley 's picture

Thanks

Great explanation / simple enough that even I could follow. Thanks.

R. Neal's picture

Or, they could just add the

Or, they could just add the tax on to the invoice. No cost increase, no effect on margins (except maybe some incremental bookkeeping costs.)

You have to wonder if the medical device companies are just using this law as an excuse to trim some fat.

Big Al's picture

I think the thought is that

I think the thought is that if they attempt to raise the delivered price whether it's as a separate line on the invoice or built into the unit price, there will be a negative customer reaction either in the form of refusing to pay the tax or opening up a bidding war. After all, Metulj did say that this is a commodities market and by definition, products are easily interchangeable and to fischbobber's point, they may be preparing for that price war so cutbacks probably make sense.

Big Al's picture

Maybe a simpler way for you to understand is:

1.7% has to be increased by 135% to get to the original 4% or:

1.7 x 135% = 4

Elementary.

fischbobber's picture

Fixated

You are fixated with the idea that DeRoyal has a four% margin and no play whatsoever within their business practices. I would submit that you are likely wrong and that most of the premises you've put on the table are false to begin with.

In addition, since this is an industry-wide tax, I would submit that Randy's scenario is the likely bump. Look for a 2.3% price bump.

Big Al's picture

Don't see the fixation

I don't see the fixation to which you refer. The example provided by Clement was based upon DeRoyal being 5 times more profitable than the similar competitor and that's probably a stretch but let's say they're 10 TIMES more profitable putting their margin at 8%. The new excise tax then drops the profit to 5.7%. In that example, DeRoyal would only have to grow 40% to get back to their previous level of profitability. Now, let's say they are 20 TIMES as profitable than the similar competitor, then they only have to grow 16.7%. 16.7% is approximately the percentage of Americans without coverage. So, DeRoyal simply has to be 20 TIMES more profitable than this competitor to get back to even via an expanded market. Of course that's a ridiculous proposition and as has already been pointed out, many of the 50M are receiving healthcare, including medical devices, but the cost is simply shifted to those with insurance.

Every company has efficiencies that can be squeezed out but DeRoyal sounds lean as it is so they've likely been managing costs tightly for some time.

As to adding it on, we just don't know. Let's say DeRoyal adds it to the invoice, the customer could refuse to pay it. The tax is on the manufacturer not the provider. Regardless, the customer could say "I'm not prepared to pay this" then bid out their business likely cutting into DeRoyal's price given that similar companies are willing to accept a .8% margin.

The main point is that absolutes are being posted that this is going to be a big financial win for this company while no one without financial info on this company can logically make that statement.

R. Neal's picture

The tax is on the

The tax is on the manufacturer not the provider.

The tax is on the sale. The manufacturer is required to remit it. Just like sales tax. I suppose they could just decide not to collect it and still remit it anyway, for some reason.

Big Al's picture

In the future...

Eventually, the tax gets built into the price just like gasoline. My point was that if they choose to raise the delivered price to the customer, the customer would have to be hearing that every manufacturer is doing this. If some do and some don't, the customer would "shop" the business which will likely be detrimental to the price.

R. Neal's picture

So maybe you could direct us

So maybe you could direct us to a local retailer that doesn't collect sales tax, or a tire store that doesn't collect the excise tax and instead absorbs it as a cost?

Frank's picture

Pilot & Fisher

My gas receipt from Pilot this morning didn't list a separate excise tax nor did my Fisher Tire receipt from last year.

From Wikipedia:

Excise tax in the United States is an indirect tax on listed items. Excise taxes can be and are made by federal, state and local governments and are far from uniform throughout the United States. Excise taxes are collected by the producer or retailer and not paid directly by the consumer, and as such often remain "hidden" in the price of a product or service, rather than being listed separately. This is thought to explain their appeal to many politicians.

R. Neal's picture

Check your phone bill.

Check your phone bill.

metulj's picture

There is a sticker on the

There is a sticker on the Pilot pump down the street from me that reports the excise tax in each gallon. The ignorance of how this works is astonishing.

Frank's picture

Seems to me...

Seems to me the problem is inconsistency. You have to check your invoice for telephone but look for a sticker on the pump of a service station & it may be built in to tires or maybe not. Inconsistency & uncertainty bedevil businesses. For medical device companies, their hospital customers are mainly not-for-profits operating on average margins of 1.5% who will have to push back on cost increases. While their charitable case load will fall, so will their reimbursements. I would think that simply trying to pass along this tax will be difficult.

metulj's picture

That is completely

That is completely speculative.

Crowley 's picture

Boy howdy, sure is confusing.

Boy howdy, sure is confusing.

Big Al's picture

Almost as speculative

Almost as speculative as:

"Pete Debusk is set to become even richer. He can afford a bit more off the top."

metulj's picture

Not really. Since sales will

Not really. Since sales will increase with ~40 million previously uninsured people entering the market, I stand by it. Since excise taxes on tires haven't stopped the US transportation system from running, I stand by the rest of it as well.

Clements's picture

Not really?

A. You're speculating that 40 million people are not consuming medical devices. As was explained, many of the DeRoyal's products are Emergency Dept. products where those without insurance are treated.
B. You're speculating that DeRoyal's customers will pay the tax if billed. I believe it was you who characterized the firm's products as commodities. If you're correct, by definition they could be easily switched out should a customer become upset / maybe over billing of a tax that hospitals may believe is to be born by the mfr.
C. You're speculating if the company cannot collect the tax, the increased sales would be enough to make up the profit.
D. You're speculating that a hospital will not seek other bids when presented with an increased, delivered cost.
E. You're speculating that DeRoyal is not at the point of diminishing returns.

metulj's picture

Just when you think it can't

Just when you think it can't get any more divorced from reality. It does.

Big Al's picture

Which of Clements' points

Which of Clements' points aren't valid? Just curious.

Crowley 's picture

No sticker or tax listing on

No sticker or tax listing on my Pilot pump this mornin'

metulj's picture

Yet you paid the 27.4 cents

Yet you paid the 27.4 cents and a great crack in the earths crust did not appear.

Big Al's picture

I think the point was that

I think the point was that there is not only inconsistencies between industries, there are inconsistencies between products and apparently within the same organization (Pilot).

fischbobber's picture

Sorry Al,

I forgot about the imaginary competitor that no one seems to be able to place. And of course their market forces and competitive position won't change now that people that have done without have access to the medical system.

I like your new theory though that everyone that didn't have coverage is a deadbeat pushing all their optional needs on those of us with coverage. Most I know without coverage have gone without or just died.

Big Al's picture

New theory isn't

Firstly, I'm for Medicare for all. Single payer system would solve many problems. Cost shifting isn't a new theory; it goes on daily but if you re-read my post, I simply said that some % of the uninsured do indeed receive healthcare services. Hospitals can't turn away the sick, Interfaith Health provides, etc., etc.

My one and only point is that absolute statements that this is to be a windfall for a specific medical device company isn't reasonable without knowing the inner workings of the company and its financials.

If the tax can be passed along and is passed along by every company, it would be profit neutral for the manufacturers except for added burdens of collection, remittance, compliance, etc.

Crowley 's picture

Tax exempt?

I wonder if tax exempt hospitals can be expected to pay an excise tax?

Frank's picture

It was Medical Action: symbol

It was Medical Action: symbol MDCI

fischbobber's picture

MDCI

I believe that was the sales company that specializes in Medical Supplies. If it is indeed the same one touted in another thread, they had no R&D budget and merely package products for specific instances.

They did have a curious blip in their trading history though back in June that would suggest something is not right (6/22/12).

I don't believe they are germane to this discussion as they don't appear to offer anything innovative, beyond a specialized sales force.

Clements's picture

Fischbobber, You must be

Fischbobber,
You must be thinking of another company. Medical Action is a primary DeRoyal competitor, similar in size, which employs hundreds in its FDA registered facilities in Tennessee, North Carolina and Virginia. They are, like DeRoyal, a repackager in that they manufacture FDA registered custom, surgical kits.
Very germane.

fischbobber's picture

DeRoyal is also a manufacturer

My point on Medical action is that they are a sales company not a manufacturer. The way one would typically hide profit is a pure sales company is to expense it out off the top. One typically cashes in when the stock goes public, but these sorts of entities tend to be personality driven and somewhat trendy. Their lack of a research and development budget is a huge red flag for any long term investor and their day to day success or lack of it would appear to have everything to do with the whims of the market and their suppliers and little to do with their own innovations carving out a niche.

I've watched several changes in the pharmaceutical market and seen folks go from great gigs to unemployed at minor changes in the market and laws simply because they were playing one seam in the market or their corporation decided to go in a different direction. For instance, I noticed that in one Medical Action kit the J&J antibacterial kit was included. I presume that is their new super-antibiotic. J&J used to market that directly to the hospitals (and may still) but I do know that one guy locally that was selling that product for J&J has been downsized. This Medical Action kit would appear to be a much more cost-effective means of marketing that reaching out to individuals.

I don't believe, based on their web site or on their YaHoo finance report, that they are anywhere near as diverse as DeRoyal, but it would appear they a a strong knowledge of their market and a fairly diverse offering of product. Repackaged product. From other manufacturers. They would compete with Deroyal for a niche in the market but would likely be highly exposed to day to day changes in the market.

I wouldn't add them to my portfolio, feel free to do as you wish.

Big Al's picture

Medical Action is a manufacturer too

The plants that they have in TN, NC and VA are FDA-registered MANUFACTURING facilities. They design, assemble, they injection-mold..in other words, they manufacture and are a clear and aggressive competitor to DeRoyal. They do not however appear to offer orthopedic products which is a specific DeRoyal division. Regardless, it is clear that they are similarly situated manufacturer of medical devices and will be affected by the Medical Device Tax. Their profit margin is running .8% but I have no idea what DeRoyal's is. Maybe double? Triple? Quadruple?
If quadruple, that's 3.2% with 70+% set to be consumed by the new excise tax.

fischbobber's picture

R&D

Why would a manufacturer NOT have an R&D budget? There were some other parts of their info that I found squirrelly, but I didn't take the time to find out if they were typo's or true red flags.

Hell Al, they're a penny stock. Put your money where your mouth is and ride out the storm. I don't like them as an investment. I think they're hiding profit from the stockholders to keep from paying dividends. You do what you want though.

Big Al's picture

Not the point

I wasn't looking for investment advice but rather was simply pointing out that this is a similarly situated company as DeRoyal that has a .8% margin and is about to get hit with a 2.3% excise tax. Again, DeRoyal may be much more profitable but like metulj posted, these are commodities.

fischbobber's picture

And my point

is that the numbers appear to be deceptive and I wouldn't invest in this company based on their business practices. There are reasons companies don't go public.

Big Al's picture

Understood but that's not

Understood but that's not germane to this thread which isn't about whether one should invest or not but compares similar companies - similar in size, age, geography, product mix, etc.

Crowley 's picture

Sorry

Sorry...certainly didn't mean to sound condescending.

fischbobber's picture

Observations

And trust me, I don't come close to qualifying as rich, even under the definition set by Mr. Obama.

Nor do you come close to being intelligent, even under the definition set by Mr. Bush.

csm's picture

I'm 58 years old. As it is,

I'm 58 years old. As it is, I have to keep the insurance as a bridge for what Medicare doesn't cover. Can someone show me where in the Constitution that healthcare is required. Why can't my kid have a $5000 deductible catastrophic policy that he can afford while working and going to school? Because it's not good enough. Stop letting the government run your life by edict or confiscation of YOUR money.

metulj's picture

I suggest you read the PPACA

I suggest you read the PPACA and get back to us, and the Constitution is not an administrative law document. It does hold that the PPACA is constitutional though. The hole in your coverage is patched by the PPACA. It was introduced by Bush, et al.

R. Neal's picture

I'm 58 years old. As it is, I

I'm 58 years old. As it is, I have to keep the insurance as a bridge for what Medicare doesn't cover.

I'm confused. If you are 58 how do you have Medicare? Unless you are disabled and on Social Security, too?

Or did you mean you anticipate having to have supplemental insurance when you do qualify for Medicare in the future? That's what Part B or whatever it's called is for. It is almost certain that you won't be able to keep any individual or employer provided policy at that point. You will have to transition to Medicare and you can buy a supplement to cover what they don't.

(And that's a mandate, for all practical purposes, that has been around pretty much since Medicare.)

bizgrrl's picture

I'm 58 years old. As it is, I

I'm 58 years old. As it is, I have to keep the insurance as a bridge for what Medicare doesn't cover.

Are you on disability and have Medicare at the age of 58 or are you speaking hypothetically?

Why can't my kid have a $5000 deductible catastrophic policy that he can afford while working and going to school?

If your kid is going to have some sort of insurance policy, what is wrong with the new plan?

Why not get rid of Medicare? Why not get rid of Social Security? Why don't you build your own roads? Why don't you hire your own security? Why don't you build a system to protect your house from fire so don't need a fire department? Why have a minimum wage? Why have public schools? Why have libraries? Why have an agency to ensure our food and drugs are safe?

Government? Who needs government running any aspect of your life?

michael kaplan's picture

and while you're at it, why

and while you're at it, why not fight your own wars in iraq and afghanistan?

fischbobber's picture

During the course of the discourse

You asked this question,

"Why can't my kid have a $5000 deductible catastrophic policy that he can afford while working and going to school?"

It stuck with me for two reasons. The first was my initial gut reaction which was, "What kind of rat-bastard would kick his kid off his insurance while he was still in school?" and the second was, "Why shouldn't there be a realistic, low-cost alternative for young and old people who have the cash to put up a medical bond for a high deductible lower cost insurance?" So I did a little reading.

As near as I can tell, the answer to that question is that we have elected a do-nothing obstructionist as governor. The individual states are mandated with setting up insurance pools for citizens to choose various policies to suit their needs. We haven't done that. Rather than reach out to the citizens of the state of Tennessee to see what sort of individual policies would best suit our populace, our governor has chosen to stomp his feet, hold his breath until he turns blue and threaten to take his ball and go home. He has chosen to act like a spoiled brat instead of doing the job he was elected to do. If you think the citizens of this state that are dependent on our governors plan for private insurance are going to get screwed, you may well be right. The people that are in charge are sitting around with their thumbs up their ass.

USA Today has a basic overview of the situation in their weekend edition. The bottom line is this, at this point healthcare is a state issue subject to federal approval. Tennessee's plan is our plan, only we don't have one so the market needs and demands of our state's citizens are likely not going to be met. We have the exact do nothing type of government we elected.

The more I kicked your idea around in my head, the more I felt like it could be viable until I realized the reality of our current state of affairs in our current state government. You're screwed dude.

csm's picture

fischbobber, so because I

fischbobber, so because I disagree with you, I am unintelligent? Interesting tactic for a discussion. Have I insulted anyone in this conversation? Anonymous commenter insults another anonymous commenter, the world is a better place. Too funny!

fischbobber's picture

Intelligence

I wasn't meaning to be insulting, it was just an observation based on comments like these;

ruin the best healthcare system in the world over what amounts to a very small percentage of people who don't pay their bills or buy insurance.

This is not only a misstatement of fact, but shows a clear lack of understanding of the economics of the situation.

Fill in the blank legislation should be unconstitutional but I'll settle for getting rid of anyone who voted for it.

This insinuates the Affordable Healthcare Act is unconstitutional despite a recent SCOTUS ruling to the contrary. This would show either a total detachment from or total disregard of reality.

Hey, if I could keep my insurance policy, which is pricey, and not go on Medicare, that would be awesome.

See now, that's really the point isn't it? Because you can, if you can afford it. And if you can't you still have access to healthcare. Hence the name Affordable Healthcare Act.

csm's picture

metulj, isn't that just the

metulj, isn't that just the prescription drug portion? Regardless, I don't want the government "patching" anything for me. I want to pay for the insurance and the coverage it covers or pay for services myself. Radical!

metulj's picture

You still get to do that.

You still get to do that. What's your issue, exactly?

csm's picture

My issue is that our admitted

My issue is that our admitted problems in the area of healthcare did not need to be cured by totally revamping our system. And that the legislation passed to do that had so many areas that were fill in the blank to be determined later. Which is going on now. I won't support representation that finds that acceptable. It doesn't make sense. Try smaller less radical changes first. But single payer is the goal. I am not a fan. The other thing I find interesting is that you feel that because I disagree with your view, I am an idiot. You seem like a smart person, why stoop to weak person's tactics?

csm's picture

Needless to say, I am not

Needless to say, I am not happy with the government being able to "tax" us into purchasing a product or a service. Support of this type of ruling by SCOTUS will inevitably come back to bite folks in the hindquarters. Obviously I am a small government person who thinks that taking taxpayer money funneling it through massive bureaucracies and filtering it back to the public in small inefficient forms of goods and services is illogical. And if you are unhappy with our health system, why do you want it to look like our educations system? And you might be right, I might not understand the financial aspects of all of this on the level you present, but may I point out that very few financial entities are what they appear and I trust what I do with my own finances much more than those who required TARP and the massive Stimulus appropriations to fix them. And I won't hesitate to point out, they are far from fixed. Throwing money at a problem, especially money you don't have, doesn't appear to work.

csm's picture

I'm sorry, I have missed

I'm sorry, I have missed several comments, no I am not on disability and yes I would like to keep my insurance instead of going on Medicare. Yes I do realize that isn't possible but I don't have to like it. I know you all think it is crazy but I don't want the government in my healthcare or my retirement.

csm's picture

bizgrrl roads and security

bizgrrl roads and security are covered in the Constitution as job of the federal government.

csm's picture

It's been great talking to

It's been great talking to you all, thanks, I've enjoyed it. Time to go have a real life.

George's picture

RE: Back to medical device

R. Neal, your comment about sales taxes or excise taxes not adding to price or cost is very telling about the liberal position and its lack of thought.

Remember, all taxes are paid by consumers, regardless of where the tax incidence lies. The sales or excise tax makes the medical device more expensive to the consumer. For his insurance policy to cover this added cost, it will cost the consumer more money. If the government is to pick up the insurance cost, it will cost the consumer more money via taxes. All the cost always comes back to the consumer! BTW, sales taxes and excise taxes impact all consumers equally and apply equally to poor and rich consumers, so they are considered by liberals to be regressive.

It seems that liberals don't understand tax incidence and tax burden. Congressional liberals thought that increasing taxes on big corporate manufacturers would come without a cost to consumers. While the tax incidence goes directly to the corporation, the tax burden is born by the people buying the product (higher cost for med device patients) and the people making the product (lost manufacturing jobs).

R. Neal's picture

not adding to price or

not adding to price or cost

For the manufacturers, who are claiming it as the reason for layoffs.

George's picture

?

So, now you're wanting to make the product more expensive directly to the consumer? What about all those poor people you stand up for? Why do you want to make things easier for big business, but harder for poor people?

When you put a tax on something, you place a negative incentive on it. With more taxes on medical devices, fewer are bought, since someone will put it off as long as possible, and insurance companies will either charge higher premiums to cover the cost or they will shift more of the cost to the consumer.

The higher consumer cost will lead to at least some decrease in demand, which will lead to layoffs. For those who choose to purchase at a higher cost, they will have less money with which to purchase other items, leading to decreased demand for other items and layoffs at other manufacturers. If I spend more money on my medical device, I have less money with which to buy food, clothes, cars, or washing machines -- and the people employed in those industries will suffer.

Do you see where this is going? This taxation has picked winners and losers. The government is picking who will get more money and who it will take money from. If you're on the losing end of that, like the employees at DeRoyal, you are no longer free to have a say in your own destiny -- you are subject to the whims of the government.

Barker's picture

dear george

You're saying the consumer pays for any tax increase. That means DeRoyal doesn't lose a dime, right? Because they pass along the price to consumers, right? So why are they concerned?

George's picture

Econ 101

Again, you're having a hard time with tax incidence vs tax burden.

Remember, the world is dynamic, not static. Some of the tax burden will ultimately be born by consumers in the form of higher prices. Some of it will be born by the workers in the form of lost jobs.

A tax is an additional cost for a business, just as higher property taxes are an additional cost fo you and me. Keeping in mind that the goal of a business is to make money, it will have to adjust its practices to make the desired amount of money with extra costs added in. DeRoyal will have to increase its income (raise prices) or decrease its expenses (layoff employees).

Similarly, if your goal at home was to have $X left over at the end of the month and your taxes went up, you would have to either increase your income or cut some expenses. have you ever stopped purchasing a service because it was too expensive? Maybe stopped taking clothes to the dry cleaner? Maybe mow the lawn yourself instead of hiring the neighbor kid to do it? Have you ever bought less at the store to save money? If so, you have fired or laid off the people who did those things for you.

You shouldn't be upset with DeRoyal -- they're only doing the same things you do yourself.

Barker's picture

patronizing

Don't be so patronizing, George. What I was wanting was for you (and anyone else) to acknowledge that health care is different from other markets.

Health care isn't a producer-consumer market. Everyone participates in the health care market whether they want to or not. And there is a third party - insurance companies - in between producers (I bet doctors get really peeved about being called producers ... ) and consumers ( ... just as I get peeved about being called a consumer instead of a patient).

It is similar - but not identical - to the relationship between producers, consumers and credit card companies. The canard about the government being able to force you to buy broccoli was not relevant. Unlike hospitals, which have to give services to the uninsured (those without cash or credit cards), grocery stores don't have to sell broccoli to anyone. Only those with cash or credit cards (insurance) can buy broccoli. Anyone else is thrown out of the store.

George's picture

Not quite

Health care is not quite as you suggest. Health care CAN be denied without payment. My doctor office expressly denies TennCare insurance. If you have no cash and TennCare insurance, you don't get to see that doctor, just like you don't get to buy broccoli if you don't have cash and have a credit card the store doesn't accept.

Health care is entirely a producer-consumer market. You don't have to receive health care -- millions of people every day choose not to go to the doctor. I know plenty of people who don't participate in the health care system -- and its their free choice! I know plenty of others who choose to participate and do so without insurance. They simply write a check when they go to the doctor.

But, let's not cloud the issue. When you get right down to it, someone is selling his product, service, or expertise; and someone else is buying that product, service, or expertise.

The original article shows how the process that I described works in the real world. You're trying to tell me how what's really happening is impossible because you think the market is something that the world clearly thinks it is not.

If your position were accurate, why aren't there any real world examples of your position in use?

Barker's picture

Ha!

Your friends won't have a "free choice" if they have an accident (not an uncommon experience) or eventually have a serious illness (virtually a guarantee). People don't just write a check when they are in an emergency room. You are living in a dream world. And everyone has to pay for your dream. Either we all pay through universal coverage or only you and I pay through increased premiums on our insurance plans.

I grew up the son of a funeral director and I know with absolute certainty that most humans die after long and painful (and expensive) illnesses. Don't give me any crap about dying in your sleep. It rarely happens unless you're in a nursing home -- and that qualifies as dying after a long illness. And we all pay for it. That's called community.

Barker's picture

rationing

If health care can be denied because a doctor won't take TennCare, that's rationing. Which is, if I understand things, one of the things that we don't like here in America. But the only difference between our system and Britain's is that in Britain rationing is done by the government (which runs the health care system) and in the U.S. rationing is done by private companies (which run the health care system) based on a patient's private coverage and ability to pay. Both systems ration care. In Britain, all people have to wait for certain procedures; in America, some people never get care.

Barker's picture

and

... and if you've ever tried to get an appointment with a specialist in the U.S., you know that an office visit, much less treatment, is not exactly prompt. Not unlike those "socialist" countries we abhor.

George's picture

Absolutely

Rationing happens EVERYWHERE! I'm happy you acknowledged it!

Rationing happens when resources are finite. There are only so many doctors and hospitals to go around, so how do we decide who gets to use them and who doesn't? We price it.

Prices help to ration resources to where they are most dear -- to where they are wanted the most, as evidenced by dollar vote. So, when the price of gasoline increases, many of us consolidate trips and drive less. Some of us don't. So, if you drive more, you obviously value that gasoline more than someone who doesn't drive as much.

In health care, price also rations the resource. If you have to pay $250 each time you go to the doctor, you will make sure you only go when you need to. If you don't have to pay out of pocket at all, you will go at times when you maybe didn't need to go. This drives up system costs significantly and is precisely the reason why socialized medicine represents a multi-billion dollar deficit in all nations that have it.

So, if the rationing is done by price, I am free to choose how I can respond to that. Last week, my brother took his young son to the pediatrician when he probably didn't absolutely need to go. But, he didn't want to take any chances with his son and found the $100 office visit to be worth the price.

In my mother-in-law's native Canada, her son couldn't take his boy to the doctor because the government rationed the care and told him that he would have to wait 2 months to see a doctor.

When you ration by price, I at least have the opportunity for care. When the government rations care, I have NO opportunity for care outside of their recommendation. I have some measure of freedom when it is rationed by price. When the government does it, I have no freedom.

And just wait until you or a member of your family has one of those long, slow, painful, grotesque illnesses and is dying. In our current system, you can prolong your life as long as possible and get whatever care you want. In Canada, your doctor will tell you that you need a particular treatment in the next two weeks to save you life and the government tells you that you can't get treatment of over a year. I have watched family members die in Canada because they couldn't get the treatment they needed.

R. Neal's picture

I have insurance and pay $300

I have insurance and pay $300 to $600 out of pocket for every visit, twice a year, whether I "need" to or not.

Except for emergencies, most doctors' offices are making appointments weeks to months out, especially for new patients. So we have all the inconvenience and few of the benefits.

George's picture

So ....

What's your point? Right now, you have the option to spend that $300 to $600 for an office visit (highly unbelievable) whenever you want. Under Obamacare, you only get to see the doctor when they think you should, then you get to spend mor eto do it.

BTW, I totally don't believe any of the hard luck stories and bull that you libsput on this webiste about your insurance. I worked in the insurance industry for 10 years and have never seen any of the policies you people are talking about. I worked for the US Dept of HHS for 5 yrs and never saw any of these, either.

I've never even seen a simple office visit cost $600.

You're blatantly lying to make other feel sorry for you, but its not working here. I didn't have health insurance two years ago and spent less going to the doctor than you do with your insruance. I even paid for a knee replacement out of my own pocket for less than Pam Strickland claims is would cost her for 6 months of bare-bones insurance.

Your lies aren't fooling anyone.

R. Neal's picture

I don't need anybody to feel

I don't need anybody to feel sorry for me and I'm not a liar.

An annual complete physical with EKG, full-blood workup and other poking and probing and stuff is about $600. (Actually I pay a little less because I get a discount for paying cash.) Then there's the (recommended by my doctor) six-month follow up with a partial blood workup that's about half that. So maybe you don't pay for anything out of pocket and don't really know how much anything costs, or maybe you just don't go to the doctor at all.

Anyway, I was responding to your assertion that "If you have to pay $250 each time you go to the doctor, you will make sure you only go when you need to," which is not only demonstrably false but also foolish and not very good advice.

Barker's picture

you cretin

You cretin, I've had people in my family die from long, slow, painful, grotesque illnesses, as you describe them. I will refrain from the personal insults I'd like to hurl.

Rationing by price is still rationing. I thought we had the greatest health system in the world.

George's picture

What?

You called me a cretin, then said you will refrain from personal insults? What?

I understnad where you're coming from, but understand that all things are limited. There is only so much air in the world and there are only so many health services to go around. Because these resources are finite, they must necessarily be rationed.

So, they can be rationed by price, where you are free to choose if you want to pay for them or not, OR they can be rationed by the government, where someone else gets to decide what you get and you have no say in the matter.

What you're telling me is that you would rather have the government tell you that you can't have something.

Let's see if you feel the same way when your loved one looks you in the eye and asks why the government won't let her get the treatment she needs in time.

Barker's picture

govt

This law doesn't provide for the federal government to decide care. That will remain in the hands of insurance companies.

Barker's picture

Yeah

Yeah, the personal insults would be harsher than calling you a cretin but I held back. If you want, I can unload on you.

Barker's picture

treatment

"Let's see if you feel the same way when your loved one looks you in the eye and asks why the government won't let her get the treatment she needs in time."

I'd probably have the same reaction that I would have if my loved one looked me in the eye and said the insurance company won't let her get the treatment she needs. If you think that doesn't happen, you are a fool.

George's picture

Come on, now....

An insurance company can't prevent you from obtaining care. They may not pay for it, but they can't prevent you from getting it.

However, with the government in control, it CAN prevent you from getting care, just like it does in Canada.

metulj's picture

Exactly. Health is external

Exactly. Health is external to markets. Every other developed world economy understands this except the US. We have a human tragedy unfolding among the 40 million+ uninsured and these folks want to argue angels dancing on the head of a pin.

R. Neal's picture

Aircraft Carriers. Just

Aircraft Carriers. Just sayin'.

B Harmon's picture

Going to Canada for surgery

A married couple that are friends of ours pay $600/month each for an insurance policy with a $10,000 deductible/each, with United Healthcare. It does provide some discounts for all the services that are not covered generally (physician visits and drugs).

So the husband needs to have a hernia repair which is outpatient surgery now. The policy not only does not cover any outpatient surgery, the cost of it does not go toward that deductible. So they were calling around trying to figure out how much the surgery would cost here in Knoxville. They got the CPT code for the procedure, got a quote from a few surgeons. Called two hospitals and no one was really able to give a price. On one hand they may be eligible for some group rates, but since it is not a covered benefit, they may not get the group rate. Then she had to contact the hospital based anesthesiologist and get a quote... She got a very odd range, $1200- 4000, was as close as they would quote. Bottom line is about $15,000 to have an outpatient hernia repair!

There is a hospital in Canada that does the procedure, everything included plus a 3 day hospital stay for $4500.

Guess where they are getting the surgery done?

R. Neal's picture

Yes, google Medical Tourism.

Yes, google Medical Tourism. India is apparently a popular destination. "American trained" doctors, too!

Up Goose Creek's picture

Obamacare

I have Obamacare and I'm happy to call it that. It rolls off the tongue a lot easier than Pre-existing condition insurance plan.

I haven't had any problem getting Doctor appointments. I scheduled a physical and got in a couple of days later. Mammogram less than a week. I set an eye appointment for about 3 weeks out.

One thing I have noticed at the GP - waaaaay less people in the waiting room since the recession started. Some have attributed this to the increase of high deductable plans.

With more taxes on medical devices, fewer are bought, since someone will put it off as long as possible

Well I think this is the idea. Though I'm not sure 2.3% will make a difference, if you get a few people to reconsider scooters or remember their aunt has an old pair of crutches in the garage you'll start whittling down the health care costs. $500 crutches? Really? no wonder we have a Problem.

Pam Strickland's picture

George (not verified), you

George (not verified), you called me a liar. I may not say what you like but I don't lie. That's what health insurance was quoted to me in March 2011. And if you got a knee replacement for less than that, you were given an extreme discount or you had a tourist operation (went to Mexico or somewhere).

I'm taking my cue from Barker and holding back from what I really want to say to you because, as has been said, you clearly do not live in the real world. You need some reality to look you straight in the eye. Perhaps then you would have some compassion.

As for Canada, I have a very dear friend who lives in Canada. She has brittle diabetes and advanced coronary disease. She has always gotten the care that she needs. And the only reason that she doesn't move the States is because of healthcare. She could never get coverage here.

George's picture

Wow

I'm noticing a lot of anger, wishes of harm, and very little compassion from people who claim to be very compassionate. I guess its easier to demand someone else be compassionate than to actually do it yourself.

Why do you feel such contempt for those who don't agree with you? Why so much anger? Your posts always have lots of hostility and hatred to others. Try living life with a smile -- its much easier!

I've heard more hard luck stories here than I ever heard while working at HHS and I've never seen insurance premiums or co-pays as high as you're stating here. I have been out of the insurance industry for the last 2 years, so I suppose things could have changed. But, if things got so much more expensive in the last two years, we would have to look to the partisan legislation and president that made it that way. We would have to question why it is so much more expensive under Obama than ever before in history.

I'm also seeing a lot of people who don't understand economics and freedom. I'm seeing a lot of posts from people not unliek yourself who want to demand something from someone, but don't want to pay for it. I don't see anyone on this forum willing to be on the "giving" side, but they all want to be on the "getting" side.

metulj's picture

It's really fascinating to

It's really fascinating to see how such important former industry leaders and government officials can find so much time to puke bullshit talking points from the chief anti-PPACA org's web site.

George's picture

If you're looking for an

If you're looking for an important person, you won't find that in me. I'm just a regular guy trying to support his family.

While I'm still seeing hostility, anger, profanity, and lack of compassion, I have no idea what an "anti-PPACA org's" website is.

Can you explain?

metulj's picture

Well, of course you are.

Well, of course you are.

Rachel's picture

I'm also seeing a lot of

I'm also seeing a lot of people who don't understand economics and freedom.

I understand economics and freedom just fine, thank you. I just happen not to agree with your interpretation of them.

I've mostly stayed out of this discussion because there's no point in arguing with people who say things like this quote from you.

P.S. I have always had employer provided health insurance, either from my job or my spouse's. And it's been pretty durn good insurance. As we get older I keep seeing reasons to be very grateful for that, like when my husband had to have a heart valve replacement (and BTW, he's one of the most fit people you'll ever meet; he just had a congenital defect that was eventually going to damage his aorta and heart and probably kill him. Got any idea what the bill was for THAT one?). Or my recent experience with being stuck at home for 6 weeks for an ailment that wasn't life-threatening, but that was pretty much robbing me of my life. Turned out the only real treatment for it was $700+ worth of medication. Or the time when my husband had a bike wreck in Portland, Oregon while we were on vacation and had to have 2 plates and 10 screws inserted in his arm.

In these situations, people who can't get or afford insurance probably would have a) died, b) gone without the medication and still be suffering 24 hours a day, and c) gotten the surgery (you can't walk around with bones sticking out your arm) and had the rest of us pay for it through higher premiums.

Those aren't "sad" stories. They're real life encounters. All of us are going to have them sooner or later. Those of us with decent insurance are going to come through them ok.

Pardon me if I'd like for more of my fellow human beings to have the same opportunity.

Barker's picture

compassion

I've never claimed to be compassionate. And I understand economics and freedom just fine, thank you. Why don't you just go on paying for your insurance all by yourself (which I'm sure you're doing -- a rugged individualist such as yourself wouldn't let your employer pay) until you qualify for Medicare (which I'm sure you won't accept)? And when you're in the hospital or nursing home or hospice care, I'll come visit to ask you how that's working out for you. Or if I go first, you can come ask me. You see, we're all going to die, most of us painfully.

Up Goose Creek's picture

Marigold Hotel

When I saw that movie I told my friend - that will be me if Obamacare isn't upheld.

But the thing is - when you are sick that is the time you need to have your loved ones around you. You also don't need the stress of adjusting to different cultures, languages and food. It's good to know Canadian healthcare is available to US citizens at a reasonale price.

Up Goose Creek's picture

Paying

George - I pay for my Obamacare. $425 a month. So far I have paid in a lot more than I have recieved in benefits. I will be happy if it continues that way. I don't want to become seriously ill and use a lot of benefits. The peace of mind is more valuable than the occasional Doctor visit, BTW.

Up Goose Creek's picture

Misinformation

I suspect we have trolls who are paid to spread misinformation about Obamacare. I respond to provide information for others who might be reading along. Sure I include a little personal commentary because I might feel conversational. I don't expect to change the troll's mind that's for sure.

George, I'm honestly confused. Whose post showed a lack of compassion?

Factchecker's picture

Or for narrow minds who have it all figured out

I suspect we have trolls who are paid to spread misinformation about Obamacare. I respond to provide information for others who might be reading along.

The PPACA or "Obamacare" explained as if you're a five year-old.

redmondkr's picture

Courtesy Juanita Jean

Up Goose Creek's picture

Backup

I understand that residents of states that don't set up exchanges will be served by national exchanges. I'm not certain there won't be a high deductable plan through the exchanges. There is a high deductable plan through PCIP.

Up Goose Creek's picture

KNS comments

Well if laughter is the best medicine I hope the PPACA includes a grant for the KNS commenters on the underwear shooting. Health care costs will plummet.

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