Sunday, April 25, 2010

Thursday, April 22, 2010


As part of health care reform's package of revenue measures, the Congress decide to levy a tax on the medical device industry. Much lobbying by this industry, while failing to totally derail it, managed to push the implementation of this measure off for several years.

Some criticized this revenue measure, saying that it would raise health care costs as the industry would simply pass on the added cost to its customers (providers and hospitals) in the form of higher prices for medical equipment. The rebuttal from legislators pushing this measure was that competitive market forces would probably prevent these costs from being fully passed on. Hmm, even if correct, it is not clear to this blogger that it is appropriate for the Congress to capriciously pick on one industry to permanently reduce its margins... As to why they chose the medical device industry, this blogger has not seen an explanation , and speculates that perhaps the industry didn't donate enough scratch to Congress to "buy" immunity.

Well, the Wall Street Journal just published an article on the medical device industry, Medicare hospital payment proposal could benefit devices. Per the article:

"...New proposed Medicare payment rates for inpatient hospital treatment would generally increase reimbursement related to important medical devices, which suggests the system won't ramp up pressure on device prices in the near term. The proposal late Monday from the Centers for Medicare and Medicaid Services, coupled with a strong first-quarter report the next morning for Johnson and Johnson's (JNJ) huge medical-devices business, boosted stocks across the medical-devices space on Tuesday. The Medicare payment news was particularly welcome for a sector where investors and analysts have worried that changes to the healthcare system will put a squeeze on product prices. Such pressure may still build over the long haul, but the proposed Medicare rates for the fiscal year starting in October could ease worries about a more immediate impact. Medicare payments to hospitals don't directly impact devices prices. But they can have an indirect influence because the amount hospitals receive in reimbursement for procedures affects what they can afford to pay for devices used in those procedures. Analysts' estimates differed slightly, but they generally found modest proposed increases to reimbursement rates for procedures involving top cardiology and orthopedic devices, such as drug-coated heart stents and replacement hips ..."

So, apparently increased Medicare payments for inpatient use of some devices will reduce the pressure for higher device prices? Why? What absolute nonsense!

Consider a medical device company that gets hit with a new tax on its products. If it sells its devices to the hospitals (providers) at its usual pre-tax price then its margins will decrease. Now, if pursuant to the Medicare rules there are increased payments for device use, that would be increased revenue to the hospital and will do nothing for the manufacturer! If the manufacturer keeps its prices fixed it will lose and the hospital will gain. As such, this blogger doesn't see why better Medicare payments would be an inducement of any sort to the manufacturer, and thus they would probably seek to increase prices to offset their added expense.

OK, so if the manufacturer does raise prices and get it to "stick", then the devices will cost hospitals more. However, they (the hospitals) may be made partially or completely whole due to the increased Medicare payments, so they won't be too badly hurt. However, the net result would be an increase in costs across the board - for the commercial payers costs will be higher (might or might not translate to higher premiums); for the government (Medicare) revenue will increase via the tax collections and expenses will increase via the increased payments (unsure re the net effect here).

Bottom line: strange article, strange argument...

Misc update

The June 28th, 2008 blog entry 'Anthrax Reckoning??' updated the Steven Hatfill story and reprinted an OPED criticizing the media coverage of the Amerithrax story. The Atlantic just published a good article on this story, The Wrong Man. Read it and despair re the abysmal performance of the press and the authorities....

Misc update

The August 28th, 2009 blog entry 'Health care re-form VII (More nonsense)' discussed the medical loss ratio and how the politicians were misusing this indicator, reducing its complexity to an Animal Farm-like bleat of "high medical loss ratio good, lower medical loss ratio bad." The article Let the (Accounting) Games Begin! speaks to some of the consequences of legislation trying to impose a simple, single answer to a complex issue...

Random charts

Source: Actions Needed to Facilitate the Efficient Drawdown of U.S. Forces and Equipment from Iraq

A little war - II

The March 17th, 2010 blog entry 'A little war' noted 'A Little War That Shook The World: Georgia, Russia, And The Future Of The West', a book by Ronald D. Asmus that covered the Russia-Georgia "war" of August 2008. This blogger noted "... The biggest issue that this blogger has with Asmus' book is his treatment of the entire issue related to the role of NATO, something which is pivotal. Absent Georgian aspirations to NATO membership, entertained and supported by a number of countries in the West, and the Russian objection thereto, none of this might have happened ..."

Asmus' view of the happenings over the months leading to the "little war" are informed by his view of NATO. He conflates "democracy" and "NATO" as if these are synonymous terms... Georgia was turning towards democracy, ergo NATO membership would be a natural consequence or next step in that evolution. A key player in the earlier enlargement of NATO in the '90s, Asmus' assumptions that NATO expansion is logical and good, that no right-thinking person could find this problematic in any way, and that this expansion is a natural consequence of the expansion of democracy, color his view of the world and of the happenings in this period...

Asmus is right that divisions among NATO members on Georgia's accession sent the wrong message and thereby contributed to the developments that ensued, but he is wrong in blithely dismissing the doubts entertained by many as "enlargement fatigue." Questions existed, and remain, re the role that NATO serves and should serve, and what its rationale is given the breakup of the Soviet Union and the disappearance of the Warsaw Pact. NATO, champion and the veritable embodiment of democracy? Or is it NATO, U.S. force multiplier? Asmus stands with both feet firmly in the first camp.

Take Asmus' "frame" into account while reading the book, and the bottom line remains the same: Recommended.

(Quick note: Asmus makes his bias clear, he provides full disclosure on pages 16 to 18, ending the Introduction with "Some will suggest that my involvement in Georgia and these issues make me a partial observer of the events I describe... In any case, that is a judgment I leave for you, the reader, to decide yourself.")

Other reviews:
Missiles Over Tskhinvali
Georgia and Russia: Ungodly suffering
Times Online Review and a dissent: On not connecting the dots

NATO's Strategic and Operational Challenges
The Russian-Georgian War: Political and Military Implications for U.S. Policy
Russia-Georgia Conflict in August 2008: Context & Implications for U.S. Interests

Tuesday, April 20, 2010

Random picture

Source: More from Eyjafjallajokull - incredible images from The Big Picture

Hilarious headlines

Hilarious!! Joe Biden always has been an "everyman" but as Senator from Delaware from January 1973 to 2009 he was a 'wholly-owned subsidiary' of Delaware financial corporations.... As Senator Biden defined "Wall Street-Friendly Democrat."

Hilarious! Treasury Secretary Bob Rubin, third member of a triumvirate (that included Federal Reserve chairman Alan Greenspan, and SEC Chairman Artur Levitt) which stepped in to derail an attempt by CFTC Chair Brooksley Born in 1998 to look at closer regulation for derivatives... Fast forward several years, economic meltdown, Rubin makes excuses...

Random chart

Source: Interactive map of G20 interest rates

Monday, April 19, 2010

Great quotes

''Many women who do not dress modestly ... lead young men astray, corrupt their chastity and spread adultery in society, which (consequently) increases earthquakes"
- Hojatoleslam Kazem Sedighi, Iranian cleric

You know, a couple of days after the health care bill had been signed into law Obama ran around all over the country saying, “Hey, you know, I’m looking around. The earth hadn’t opened up. There’s no Armageddon out there. The birds are still chirping.” I think the earth has opened up. God may have replied. This volcano in Iceland has grounded more airplanes — airspace has more affected — than even after 9/11 because of this plume, because of this ash cloud over Northern and Western Europe. At the Paris airport they’re telling people to head to the train station to catch trains out of France, and when people get to the train station they’re telling people, “There aren’t any seats until at least April 22nd,” basically a week from now. It’s got everybody in a shutdown. Earth has opened up. I don’t know whether it’s a rebirth or Armageddon. Hopefully it’s a rebirth, God speaking."

- Rush Limbaugh

Random picture

Source: 3-D Sistine Chapel

Saturday, April 17, 2010

Quaking in their boots

Well it seems that Israel has figured out a way to defang Iran... and to simultaneously free the world from the 'oil dictatorship' of Saudi Arabia, Venezuela, and other oil-producing nations! How you ask? Well, Israel's Infrastructure Minister Uzi Landau has a master plan - "... in October 2009 Israeli PM Netanyahu launched a "national project" at Israel's National Economic Council to find a way to end the world's dependence on fossil fuels ..." So, Israel will develop the green technologies that will end the industrialized nations' dependence on fossil fuels, which will de-fund these regimes...

After a fit of hilarity (that really hurt) this blogger checked the date on the article and googled to find this story elsewhere. He found numerous references, none of them dated April the first! So, apparently this is "real". One wonders what Landau has been drinking....

Maybe it was something in the water, because the very next day another article suggested that a cap on carbon in the U.S. would be a good thing because the reduction in oil consumption would significantly hurt Iran by putting a crimp into its flow of petrodollars. It was accompanied by the graph below...

Wow, this really looks like a very serious reduction, assuming of course that the U.S. can (or will) actually reduce its emissions to get to the "167 case." However, the graph seems to imply much more than the reality... after a cursory glance one might infer that from 2010 to 20150 Iran's oil revenues would crater by approximately 90%. However, looking at the 'Core Scenario 167 bmt' on page 69 one sees that the price index for petroleum products in 2050 would be 1.20, or slightly higher than the price index for 2010 (at 1.15)

Using the index numbers from the MIT Assessment of U.S. Cap-and-Trade Proposals, this blogger graphed out the two cases - the baseline "reference case" if nothing is done, and the "167 case." If the assumption is made that Iran's production remains at 4.174 million barrels per day (as in the article), and that the 2010 price starts out at $83 a barrel you get the graph below:

Iran will "lose" the revenue between the two lines, or the area in red... Indeed a serious hit but no where near as drastic as is implied by the article's graph. Anyway, there are better reasons for the U.S. to cap its greenhouse gas emissions than a putative crimp in Iran's oil revenue...

Random charts

Source: 7th Special Forces Group (Airborne) Command Operations Brief

Monday, April 12, 2010

Coolbphone first look - II

After pictures of the Coolbphone unboxing, some comparison photos. Here with a Fujitsu UH900, UMID M1, BB Bold 9700, and Sharp SL-C3000:

With a SL-C3000:

With a Nokia E90 Communicator: