Think Max Baucus' recent proposal to impose $750 million in new annual fees for clinical labs is a good idea? He believes these fees, together with $12.3 billion additional new annual taxes to other health-care players, will lower the cost of health care.
Well, a couple of things have fallen as a result of the proposal — just not what Baucus was expecting.
The chairman of the Senate Finance Committee began circulating his so-called "framework" in Washington, DC, over the past weekend, and the mainstream and financial press began reporting it immediately and vigorously.
Since that morning, when the first issues of The New York Times, The Wall Street Journal, The Washington Post, and others landed on their subscribers' doorstep (or in their RSS inboxes), the shares of the nation's three publicly traded reference labs have cumulatively lost 4.6 percent of their value. Thanks, Max.
Take a look at LabCorp's stock performance over the past couple of days. On this graph, you can see the shares lose nearly 2 percent of their value in a few hours after investors got wind of the Baucus Debacle. They eventually regained some strength, closing down 1.6 percent at $68.39.
LabCorp's shares are down 2.1 percent since the Baucus ruckus Tuesday.
And here is Quest Diagnostics' stock. Notice, too, the Tuesday slide, which cost the reference lab 2.3 percent of its market value over a few hours that day. The stock also later regrouped to close down 1.6 percent at $53.35.
Quest's stock is down .6 percent since Tuesday.
And finally there's the regional BioReference Labs, the third and last — and smallest — of the nation's publicly traded clinical labs. On Tuesday morning its shares plummeted 4 percent in the first few minutes of trading before regaining some of their mojo to close the day down .7 percent.
BioReference's stock is down 1.9 percent since Tuesday.
Investors in clinical labs are right to be concerned by the government's plan to tax the fecal-occult blood out of them. And it's not as if the feds have a good track record with them.
According to ACLA President Alan Mertz, who "strenuously objects" to Baucus' new annual fees, issued a statement Tuesday in which he said that even before any new fees come into play, Medicare spending for lab tests has fallen a great deal in recent years.
“Overall, Medicare payment amounts for clinical laboratory services have been reduced by about 40 percent in real, inflation-adjusted terms between 1984 and 2004,” he said in a statement Tuesday. “Congress has acted to completely eliminate the annual update for clinical labs in 10 of the last 12 years."
And "[s]ince 2000, laboratories have received the smallest cumulative update of any provider in Part B of Medicare, only 5.6 percent compared to 12 percent for physicians and 34 percent for hospitals.”
Considering that 70 percent of all health-care decision are made after consulting clinical lab tests (according to ACLA), Baucus' proposal — which would add $187,500 in new annual fees on average for all US labs — is an insult to injury. It would mocke the work performed in these labs. Be afraid. Be very afraid.