Tuesday, September 22, 2009

Knife In The Back

The September 18, 2009 Wall Street Journal explains the self-defeating nature of the politics of pull in, "The Innovation Tax: How Max Baucus knifed the medical devices industry".

As the article explains:
...Look no further than the $40 billion "fee" that Mr. Baucus wants to impose on medical devices and diagnostic equipment. Device manufacturers would pay $4 billion a year in excise taxes, divvied up among them based on U.S. sales. This translates to an annual income tax surcharge anywhere from 10% to 30%, depending on the corporation.

... Convinced by the White House that legislation was inevitable, most of the health-care lobbies decided to negotiate and pay ransoms so Democrats would spare their industries greater harm. Sure enough, the device maker lobby, AdvaMed, was among the "stakeholders" that joined with Mr. Obama in a Rose Garden ceremony in May and pledged to "save" $2 trillion over 10 years to fund his program.

AdvaMed was nothing if not a team player. It endorsed Democratic inspirations like comparative-effectiveness research and value-based purchasing, despite the danger that under such centralized decision-making the government will decide that the most effective and valuable treatments also happen to be the cheapest—rather than those that are best for patients. It also suggested a variety of other taxes that would have resulted in a lower bottom line, much as Big Pharma promised $80 billion in drug discounts and the American Hospital Association agreed to $155 billion in Medicare and Medicaid reimbursement cuts.

But the word on Capitol Hill is that AdvaMed's tribute wasn't handsome enough for Mr. Baucus's tastes. The massive new tax—which wasn't a part of any of his policy blueprints released earlier this year—is in part retaliation.
Instead of making a principled stand against the proposed legislation, they attempted to play the special interest lobby game to try to cut the best deal for themselves.

But then they got outplayed by other lobby groups with more pull and paid the price. In other words, the politicians accepted their political cover (i.e., moral sanction), then stabbed them in the back:
Old Washington hands are saying the device lobby made a "strategic mistake" by not offering Mr. Baucus more protection money, but the real mistake was trying to buy into the ObamaCare process, instead of trying to defeat its worst ideas outright.
(Emphasis mine.)

Sometimes, when you think you're getting a "seat at the table", all it means is that you're being served for dinner...

(Read the full text of "The Innovation Tax: How Max Baucus knifed the medical devices industry")