Oct 1, 2014 1
from the WSJ Scott Atlas writes ObamaCare’s Anti-Innovation Effect
Of the many unintended consequences of the Affordable Care Act, perhaps the least noticed is its threat to innovation. Although most discussions center on the law’s more immediate effects on hiring, insurance rates and access to doctors and care, attention should also be paid to its impact on U.S. research and development and health-care technology.
The recent slowdown in R&D spending in the U.S. is in part caused by weak economic growth since the 2008 financial crisis. But the economy’s weakness itself has been exacerbated by the negative impact of new taxes and regulations under ObamaCare. According to Congressional Budget Office estimates, the new health-care law will levy more than $500 billion in new taxes over its first 10 years to help pay for insurance subsidies and Medicaid expansion. These new taxes include significant levies on key health-care industries, such as manufacturers of medical devices and drugs, and their investors.
As a result, small and large U.S. health-care technology companies are moving R&D centers and jobs overseas. The CEO of one of the largest health-care companies in America recently told me that the device tax his company paid last year exceeded his company’s entire R&D budget. Already a long list of companies—including Boston Scientific , Stryker and Cook Medical—have announced job cuts and plans to open new centers for R&D, manufacturing and clinical trials overseas.
Since the signing of the Affordable Care Act in 2010, private-equity investment in new U.S. health-care startups has also diminished. Annual capital investment has decreased to $41 billion in 2013 from $61 billion in 2011, according to quarterly reports by the accounting and audit firm McGladrey LLP. Similarly, the Silicon Valley-based law firm Wilson Sonsini Goodrich & Rosati reported in its semiannual Life Sciences Reports decreases from the first half of 2010 through the second half of 2013 in deal closings and capital raised for startups in biopharmaceuticals, medical devices and equipment, and diagnostics, with only a slight uptick in health-information systems investment.
Perhaps it may have been unintended but it was certainly not unforeseen. The ACA clearly sacrificed quality for access. As with most economic issues the unseen was ignored. Profits in the health care sector funded life saving research and that was threatened by this insidious law and the arrogant technocrats who thought they could bend the cost curve down with mere intentions and will. This remains the worst bill passed in my lifetime and anyone in Congress who voted for it should be shown the door, even if they are all from the same party.