Circum-Netting: Health Care, Innovation, Business, Aerospace

When business calls for the federal government to show restraint on taxes and regulation, that is not a call for inaction.

In its weekly Intelligent Investing feature, interviews David M. Cordani, President and CEO of Cigna and a member of the National Association of Manufacturers’ board of directors. From “Get Briefed,” in which Cordani reviews the new health care law, which he says addressed one challenge — access to care. Now, it’s time to “tackle the remaining twin challenges of managing health care costs and closing gaps in quality of care.”

The empirical data is in: consumer-oriented plans bend the cost curve in a positive way, without compromising care.

Our ChoiceFund study, a multi-year study comparing the actual claims experience of 655,000 individuals covered in Cigna’s traditional managed care plans and those covered with our consumer directed plans, shows that medical costs for individuals in consumer-directed plans went down 26% over four years, while levels of care for their preventive medicine, chronic disease management and evidence-based treatments were higher than their counterparts in traditional managed care health plans.

If the share of Americans enrolled in consumer-directed plans rose from a current 18% to 50%, and the results of the Cigna study were applied, the U.S. could achieve $350 billion in savings over 10 years.

In a recent Wall Street Journal column, John Lechleiter, president and CEO of Eli Lilly, looks further down the road and sees a serious threat to U.S. leadership in life sciences, including pharmaceutical R&D. From “America’s Growing Innovation Gap“:

The evidence is certainly mounting that we are facing today nothing short of an innovation crisis in America’s life sciences. The industry I know best, biopharmaceuticals, is facing unprecedented pressure. R&D costs continue to rise, fewer potential new medicines gain regulatory approval, and key products lose patent protection. In fact, the number of new molecular entities approved by the FDA over the past five years—92—is lower than in any other five-year period since I entered the industry in the late 1970s.

Meanwhile, the rest of the world is not standing still. The U.S. is not the only country looking to the life sciences to drive economic growth, and the very qualities that brought much of the world’s research capacity to our shores could just as easily attract that work to Asia or elsewhere.

In examining the growing conflict between business and the Obama Administration, CNBC host and commentator Larry Kudlow included Lechleiter as one of the business leaders warning against overregulation and taxation. From “Business Knows More than Obama“:

[All] business is asking for is some clarity and certainty regarding government intentions, especially on taxes and regulation. Take, for example, the new 2,300-page bank-regulation bill, which spreads 243 new regulatory provisions across ten agencies. No one really knows what’s in this document, or what the unintended consequences will be. Until people figure this out, it could freeze bank lending for years.

The Obamacare health bill similarly includes tax hikes and regulatory overreach that not only adds to business hiring costs but could put a freeze on the expansion of one of America’s most vibrant private-sector industries. Meanwhile, threats of EPA carbon regulations only add to the cost burden for business.

Finally, Marion C. Blakey, president and CEO of the Aerospace Industries Association says the Senate and House must resolve their differences and pass the supplemental appropriations bill that includes military spending. The Hill covered his statement, which included a phrase we pay attention to: “industrial supply lines.” From Blakey’s statement of June 12:

Unless the bill is passed in final form very quickly, the Defense Department will be required to take dramatic action to fund our obligations to ongoing operations. This includes delaying or cutting programs and reprogramming funds from other contracts. The resulting disruptions to industrial supply lines will cause delays in critical equipment delivery, increased costs and could lead to lost jobs in the private sector.

Given the critical stage of our overseas operations, unnecessary disruptions to the Defense Department, industrial supply lines and most importantly, delays in delivering vital equipment to our warfighters must be avoided.

Join the discussion 2 Comments

Leave a Reply