Corporate Welfare

Submitted by on Friday, February 13, 2015 - 12:52

Newtown, CT – February 13, 2015

"Corporate welfare refers to subsidies and regulatory protections that lawmakers confer on certain businesses and industries. When considering budget issues, federal policymakers are supposed to have the broad public interest in mind. Unfortunately, that is not how the federal budget process usually works in practice. Many federal programs are sustained by special-interest groups working with policymakers seeking narrow benefits at the expense of taxpayers and the general public." Cato Institute.

Of course, it's not just during the federal budget process, and in the past two weeks we have seen two separate, but related, egregious examples of Corporate Welfare trying to assert itself. First, the euphemistically named "CARE Act", proposed by Senators Hatch, Burr and Upton, as an alternative to the Affordable Care Act, would eliminate the planned excise tax (also referred to as the Cadillac Tax). As we recently wrote, the Cadillac Tax has the potential to be a linchpin in the full and complete conversion of the currently bloated and ineffective U.S. health care system into something a lot better, if employers seize the moment to radically change the way employee health benefits are designed. Further, economists from both political aisles have long criticized the significantly perverse effects that very rich benefit designs have on consumer attitudes and behaviors regarding health care services consumption. Simply put, the Cadillac Tax isn't simply a way of funding access to care for those who haven't been able to afford it, it's also a mechanism to accelerate the restructuring of the entire U.S. health care system. But bowing to corporate interests, the three Senators all but repeal the Cadillac Tax and, instead, shift the balance of the tax to….you guessed it…taxpayers.

Second, in a recent Health Affairs blog post, the paid henchmen of the medical device industry argue for the repeal of the tax on medical devices. That, by the way, is also in the "CARE Act" (and I put it in quotes because it's pretty clear that the "CARE Act" doesn't really care for the average citizen, but rather for the Fat Cat Agents of the Status Quo). But the authors go farther than the simple repeal of the tax, they propose other subsidies, including an exemption of all new medical devices from any CMS-led value-based payment program, and hinting that there could actually be ways for CMS to add special payments in the DRGs for new "innovations". All this leads to the same effect, which is that efforts to curb health care costs, which are working, would be rolled back for the sole and narrow benefit of a special interest group. And the taxpayer…whether through higher direct taxes as proposed by the three Senators, or through higher premiums as proposed by AdvaMed….would foot the bill. It is the exact definition of Corporate Welfare denounced by thoughtful organizations like the Cato Institute.

What all this means to you – As we've said before, when the trough gets narrower, the pigs start squealing, and we're seeing a lot of squealing going on. The shift to a more affordable, higher quality system is happening to the benefit of all but the narrow interests of a few groups. They won't stop trying to reverse the gains made, and we can't let them get away with another fleecing. The battle lines are drawn and we intend to slice through a few pigs.