Daily Archives: 3 October 2014

Another VA Problem

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This one, though, isn’t primarily the Veterans Affair’s doing.

Veterans at the Shreveport, LA, Veterans Administration hospital have been going without toothbrushes, toothpaste, pajamas, sheets, and blankets while department officials spend money on new Canadian-made furniture, televisions to run public service announcements and solar panels….

Some specifics:

According to the VA, the department spent $74,412 on 24 flat screen TVs for “patient/employee information”—one 50 inches wide and the others 42 inches. The furniture cost $134,082, and the solar project was approximately $3 million.

This is shameful, but this falls on Congress. Under Federal funding rules, capital equipment—the TVs, solar, etc—fall into one funding category, and supplies—toothbrushes and paste, blankets, etc—fall into a separate category. Under those same rules, the VA (and any other agency whose funding falls into different categories) cannot take funds from, say, capital equipment, and spend it on, say, supplies. It gets even more bureaucratic than that. Agencies can’t reallocate capital expenses from one capital item to another: the VA can’t, for instance, take some of those $3 million from solar and buy more TVs with it. Only Congress can authorize such reallocations.

No, Congress must answer for this misallocation. That it’s what the VA asked for in its budget request may be true, but Congress—that collection of our directly elected representatives—isn’t supposed to be a rubber stamp for every request for money that wanders by. It’s our money Congress is allocating, not Congress’ and not the VA’s.

It’s true enough that the VA could have—should have—gone to Congress and asked for a reallocation on recognition of the supply funding shortfall. That it seems not to have is an internal VA problem that supports my argument for disbanding the VA and using the budget to fund vouchers sent directly to our veterans.

There are other problems described at the Watchdog.org link above that are entirely within the VA’s ability to correct, but this one is not.

Obamacare and Health Care

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As Dr Scott Atlas, of Stanford University’s Hoover Institution, in a recent The Wall Street Journal op-ed noted,

  • Private company medical innovation R&D spending in the US the last three years averaged 2.1%, down from an average of 6% over the previous fifteen
  • Malaysia, Thailand, Singapore, South Korea, India, and the EU had greater R&D spending growth in the same period
  • The PRC had a growth rate of 22%

Certainly, those other polities, the EU excepted, were starting from a much smaller base, and so their growth rates will tend to be exaggerated. Certainly, too, our own historically weak economy is exacerbating the situation.

All that notwithstanding, though, this is a trend that is allowed to continue at the peril of our leadership in things medical. Obamacare, with its removal of the insurance aspect of health plans, actively hurts this. What plan can pay for the latest and best drugs or devices, and so drive innovation—or even those drugs or devices that are merely near the cutting edge, or that are middle tier—when those plans aren’t allowed to recoup their costs, except at generalized taxpayer expense?

There’s one aspect, though, that is a direct assault on medical innovation, and that’s Obamacare’s medical-device excise tax. This is a tax the takes 2.3% off the top—that is, before expenses and profit—of all medical device sales. This includes devices from heart pace makers to dialysis units to bandages sold in bulk to hospitals.

2.3% is no big deal?

  • Johnson & Johnson’s medical device and diagnostic sales were down 1.5% in the US, versus up 1.8% internationally, in the first half of 2014
  • General Electric reported that the US healthcare sales shrank by 2% in the second quarter, versus up 2% in Europe
  • Medtronic’s US sales for the 2014 fiscal year were up 1.7%, versus 5.9% internationally
  • Baxter reported US sales of medical products were down 15% for the quarter ended June 2014, versus up 8% globally
  • Fresenius’ US sales of dialysis products were down 1.2% in the first half of 2014, versus up 0.6% internationally

And (via the first link above)

Boston Scientific, Stryker, and Cook Medical have announced job cuts and plans to open new centers for R&D, manufacturing, and clinical trials overseas.

And so on.

Many attempts have been made to repeal this pernicious tax, the latest this past summer. The Democrat-controlled Senate refused to consider it. Again.