Nippon Life Insurance Co., Japan’s biggest life insurer, plans to invest about 1 trillion yen ($12 billion) this financial year, with as much as 80 percent of the money to buy yen-denominated bonds for stable returns.
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Washington, DC, United States (KaiserHealth) – Like many other interest groups, the medical device industry met with White House officials in the run-up to the health care battle in Congress. But while insurers, pharmaceutical firms and even the American Medical Association made agreements trading their support for specific concessions, the device makers were not able to close a similar deal.
As a result, the final health care reform bill included a 2.3 percent excise tax on device makers that’s expected to produce $20 billion over a decade to help pay for expanded health coverage.
That’s the law, or so it would seem.
But in Washington, it’s never over until it’s over. And like other medical interests who are scrambling to influence the implementation of health care reform, medical device makers are showering cash on friends in Congress and working the halls, hoping that one of five bills that would overturn the excise tax might actually make it into law.
Veteran Hill watchers say that may be a long shot, so to hedge its bets, the industry is also lobbying the Internal Revenue Service to write rules exempting hundreds of devices from the excise tax — even though the health law says the exemption should be limited to items widely purchased by the public from retailers. The outcome of that under-the-radar battle is far from certain.
The medical device business and its lobbyists have a strong record of winning concessions and at least partially deflecting the costs of health insurance coverage expansion. An early Senate “framework” version of the health bill pushed by Democrat Max Baucus of Montana, for example, would have nailed the industry with a $40 billion excise tax bill over ten years beginning in 2010. Shocked at the price tag, the device manufacturers’ trade group, the Advanced Medical Technology Association (AdvaMed), pushed back, aided by industry giants Medtronic Inc., Johnson & Johnson, 3M Co., and others.
With the help of a bipartisan group of lawmakers, the device makers succeeded in cutting the tax in half in the final health care law, which also delayed the start date for the tax until 2013, three years later than in the Baucus proposal.
Manufacturers, however, maintain that even the smaller tax in the health care law is catastrophic for them. So the industry is targeting Capitol Hill anew and working the regulatory process, searching for concessions.
Five industry-supported bills currently before Congress would completely overturn the excise tax on medical devices, the most widely supported of which are bills introduced by Sen. Orrin Hatch, R-Utah, and Rep. Erik Paulsen, R-Minn. Hatch’s bill has- Republican co-sponsors. Paulsen’s House bill has 119 co-sponsors, including three Democrats.
Hatch, who has been one of the health care law’s fiercest opponents, says the tax on medical devices will increase insurance premiums and the cost of care. Relying on an excise tax “to fund Obamacare will cripple an important engine of opportunity, job growth and innovation,” Hatch said in a January news release.
CAMPAIGN CONTRIBUTIONS FROM INDUSTRY
In 2009 and 2010, both Hatch and Paulsen were major beneficiaries of medical device industry money.
Hatch was not up for re-election that cycle but received more than $90,000 in campaign donations from the medical supply industry, which made him the trade group’s third largest political beneficiary, according to the Center for Responsive Politics. The political action committee of the AdvaMed association alone contributed $10,584 to Hatch’s campaign, and $3,150 to Paulsen’s.
The political action committees of individual companies also chipped in. The PAC of Boston Scientific, a major manufacturer of heart and other medical devices, contributed $7,000 to Paulsen’s campaign and $5,000 to Hatch’s. Medtronic, the world’s largest medical device maker — which is based in Paulsen’s home state — donated $3,000 to Paulsen and $5,000 to Hatch.
Paulsen spokesman Tom Erickson said the bill is a response to job loss fears, not industry campaign donations, and that more than 400 medical device companies are based in Minnesota. A Hatch spokesman said the senator’s bill reflects his political philosophy: “It’s something he has felt strongly about for a long time, that taxes are counterproductive,” spokesman Mark Eddington said.
Hatch and Paulsen are only two of the friends the device industry is counting on for help.
In late March, Democrat Amy Klobuchar of Minnesota and Republican Scott Brown of Massachusetts launched a new Senate medical technology caucus to increase awareness about issues facing the industry. Both represent states with significant medical device manufacturers and have been major beneficiaries of industry money.
Boston Scientific, which in 2010 had $7.8 billion in sales, is based in Brown’s state. In 2010, Brown received more than $30,000 in campaign donations from the medical supply industry, which is dominated by the device makers. Klobuchar received more than $40,000 in contributions.
“These businesses not only spark medical breakthroughs, they save lives,” Klobuchar said in comments released on the day the new caucus was launched. “Every day in every state small medical technology companies are driving the innovation agenda we need to compete in a global economy. I will continue to work to make sure that Minnesota remains a leader in health care innovation by developing innovative products while maintaining patient safety.”
The House medical technology caucus was revamped in February. According to the industry newsletter MedCity, its new website was launched on the same day that Paulsen, who chairs the group together with Anna Eschoo, D-Calif., addressed the Minnesota life sciences trade group LifeScience Alley.
In the halls of Congress, the medical device manufacturers have long pushed the jobs refrain, first to deflect taxes, and second to fend off scrutiny from the U.S. Food and Drug Administration, which regulates devices. Dr. Josh Makower, the founder of Exploramed, a medical device incubator – who frequently testifies before Congress – said the excise tax will particularly hurt small firms, many of which rely solely on investment capital for years before turning a profit.
“The saddest thing is that these small companies are exactly the ones that are delivering new innovations,” Makower told iWatch News in an e-mail response to questions.
REVOLVING DOOR
In pushing its interests, the device industry benefits from the revolving door connecting K Street with Capitol Hill.
In December, former AdvaMed executive Brett Loper, who lobbied against the excise tax, was named House Speaker John Boehner’s chief policy officer. Elizabeth Kegler, the association’s vice president of government affairs, is a former health policy advisor to Sen. Chuck Grassley, R-Iowa.
Advamed spent almost $1.5 million lobbying Congress on behalf of its members in 2010. First quarter lobby disclosure records for 2011 will not be available until late April, but medical device industry activity suggests the industry has likely not slowed its spending.
Despite device industry campaign donations, powerful allies, and support for the Paulsen bill in the House, George Schutzer, a tax lobbyist and attorney at the Washington firm Patton Boggs, said he doubts Congress is ready to overturn the device tax. A win for the medical device industry would “open the flood gates” for challenges to the health reform bill by other parts of the medical industry, Schutzer said, and would most likely result in an Obama veto.
As a result, the medical device industry has taken the fight beyond Congress to the Internal Revenue Service, which will administer the tax.
That part of the struggle appears to be splitting the industry as manufacturers try to protect their market niches. Although the medical device category includes big-ticket items generally sold to hospitals, including artificial hearts, pacemakers, coronary stents and artificial joints, it also includes a wide range of less expensive items ranging from tongue depressors to examination gloves.
The health law exempts from the excise tax eyeglasses, contact lenses, and any device the Treasury Department determines is generally purchased by the general public at retail for individual use. Certain sectors of the device industry, however, contend that devices from wheelchairs and scooters to home oxygen systems fit the exemption criteria.
In written comments to the IRS, which is expected to publish tax guidance for device manufacturers, DJO Global, the largest U.S. supplier of orthopedic devices, asked for an exemption on all items classified by Medicare as durable medical equipment, prosthetics and orthotics, including bone-growth stimulators and electrotherapy devices. The American Association for Home Care, which represents the home medical care industry, wrote that it believes all durable medical equipment, including complex power wheel chairs, should be exempt.
“Durable medical equipment and home medical equipment fit that exemption language to a tee,” said Jay Witter, senior director of government affairs at the American Association for Home Care, in an interview. Witter quoted a 2009 fact sheet released by former Speaker Nancy Pelosi that said wheelchairs would be exempt, and that the excise tax would apply only to sales of medical devices to hospitals and other institutions. The comment period on the exemption ended in late March; the IRS did not respond to questions on when it might decide who gets the exemption and who doesn’t.
Witter said it is unclear whether wheelchairs and other durable medical equipment were included in revenue calculations that projected $20 billion in revenue from the tax over a decade’s time. But since the majority of home health customers are covered by Medicare, which pays set rates, Witter said the cost of the excise tax cannot be passed on to consumers.
Diana Zuckerman, president of the National Research Center for Women & Families, a think tank that focuses on health issues, said the idea that all durable medical equipment should be exempt from the excise tax is absurd and could impair funding for the health care law.
“If they get what they want, the whole health care bill collapses,” said Zuckerman. “There is too much money involved to get rid of the excise tax or to substantially lower it.”
TAX DEDUCTION WINDFALL?
As device manufactures plead for exemptions, hospitals and group purchasing organizations worry that those who remain on the hook for the tax may simply pass it on in higher prices to hospitals and other purchasers. Curtis Rooney, president of the Health Industry Group Purchasing Association, said the excise tax could even wind up being a windfall for medical device manufacturers.
In a letter to the IRS, Rooney’s organization, along with the American Hospital Association, the Federation of American Hospitals and the Catholic Health Association of the United States, wrote that device manufacturers should be prohibited from passing on the excise tax to consumers, especially if they are allowed to deduct the excise tax when calculating their federal income tax.
Allowing device manufacturers to write off the tax and pass along the cost, the letter says, would “permit a financial ‘double-dip’ that could leave device companies in a better financial position than before the [health law] was enacted.”
Asked if device manufacturers planned to increase the prices charged to hospitals and other consumers to make up for excise tax, an AdvaMed spokeswoman declined to answer. She instead referred to a comment by David Nexon, the association’s senior executive vice president: “Each AdvaMed member company will have to individually decide how to best deal with the damaging effects of the tax. For some, that might mean cutting R&D, reducing staff or other measures. Those are tough business decisions that will have to be made if this tax goes forward and go to the heart of why we opposed the tax in the first place.”
iWatch News is the investigative news report of the Center for Public Integrity, a nonprofit group focused on investigative journalism.
– Provided by Kaiser Health News.
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Aspen Financial Services faces at least the fifth investor lawsuit filed since 2008. The company is a hard-money lender. Aspen has moved to dismiss a lawsuit filed against it in January by an investor who is a Las Vegas attorney.
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With Barnes & Noble piling money into its Nook reader to compete with the Kindle and iPad, private equity is backing away
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Even without arrests, investors pull money from firms targeted in the government’s investigation
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Washington, D.C., United States (AHN) – The new session of Congress resumes its normal schedule of hearings and debates next week with an agenda nearly certain to halt Obama administration transportation projects.
Among them is President Obama’s plan for a nationwide network of high-speed passenger trains.
Incoming chairman of the House Transportation and Infrastructure Committee John Mica said he would try to limit spending to “what we can afford.”
He has been a harsh critic of government subsidies for Amtrak.
The new Republican majority in the House of Representatives approved procedural rules last week that remove transportation funding from long-range priorities.
The new rules make transportation funding subject to annual appropriations, which can vary widely if other priorities arise.
Republican leaders are calling for a 20 percent across-the-board reduction next year in major program funding, such as transportation.
Until now, passenger rail, highways and other transportation priorities operated with budgets that required minimum levels under the Highway Trust Fund. The fund receives money from the federal gasoline tax.
The rules the House set last week eliminate the minimums.
Potential projects on the chopping block include California’s planned 220-mph bullet train that would run the length of the state.
The rail line would cost an estimated $43 billion when it is fully built out to include Sacramento, San Francisco, Los Angeles and San Diego.
The federal government has allocated $$2.25 billion to the project.
However, conflicting state and private feasibility studies disagree about whether enough people would ride it to make it worthwhile.
A Wall Street Journal editorial last month said “a realistic concern is that the state will have to terminate the project after completing the first segment because the feds and private investors won’t pay to finish it.”
Another blow to Obama’s high-speed rail plans came last month from the incoming governors of Wisconsin and Ohio.
Both decided to cancel their federally-funded passenger rail projects that already had received federal funding.
Republican governors Scott Walker of Wisconsin and John Kasich of Ohio said the economic stimulus funding was a waste of taxpayer money.
The U.S. Transportation Department rerouted the $1.2 billion to other states for their rail projects.
“High-speed rail will modernize America’s valuable transportation network, while reinvigorating the manufacturing sector and putting people back to work in good-paying jobs,” Transportation Secretary Ray LaHood said in a statement. “I am pleased that so many other states are enthusiastic about the additional support they are receiving to help bring America’s high-speed rail network to life.”
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The mutual-fund industry fleshed out a plan for a private backstop to money-market funds, rejecting alternatives considered by U.S. regulators that include abolishing the funds’ stable $1 net asset value.
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The Michigan Office of Financial and Insurance Regulation last week seized Paramount Bank. After that, Earthstar Bank was closed by the Secretary of Banking of the Commonwealth of Pennsylvania. Also reportedly closing shop was Virgin Money USA Inc.
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For anyone seeking residential hard money loans, time is of the essence. The major reason that people seek this kind of unconventional financing is because banks simply take too long, or they are unable to meet the increasingly strict criteria that the lending institutions put forth.
There is some confusion over what the money can be used for. One reason for the confusion is that lenders and brokers use different terminology. In some cases, they mean to confuse the borrower. In others, they simply forget that everyone is not as “savvy” as they are. Below, you will find some common terms used by financers and what those terms usually mean.
Acquisition loans are hard money home loans used to purchase a property. The amount available will vary depending on the lender. It is usually a percentage of the appraised value. Commercial banks typically require that you have around 20% of the purchase price. Else, they will charge a higher interest rate. Private lenders may be able to finance the entire amount and the closing costs are usually lower.
Construction loans may be used to build a residence, but they can also be used for repairs, expansions or upgrades. Current homeowners or real estate investors may be interested in these types of hard money home loans. Conventional lenders typically require that the property in question is or will be your main residence before they will approve financing. Private lenders are usually more flexible.
Mezzanine loans typically refer to residential hard money loans that are similar to second mortgages, but the term may also be used to refer to specific kinds of business loans. Mezzanine loans are short term, typically three years or less. The funds may be used for a variety of reasons, including “buying out” a business partner. The amount that you can borrow depends on the resale value of your home or business, minus the amount of other outstanding loans, such as a first mortgage, in other words, the amount of equity that you have.
Asset based hard money home loans may be used for any purpose, as long as you have collateral or assets to “put up”. Conventional lenders refer to them as secured loans. The primary difference is the time that it takes to complete the loan, but there may be other differences. If you have collateral, private lenders may not be as concerned by your credit score. For conventional lenders, a less than perfect credit score may end up costing you thousands of dollars more, because of higher interest rates, if they will approve the loan at all.
Bridge loans fill in the gap when permanent financing solutions are in the works, but the actual purchase needs to be completed quickly. Bridges may be commercial or residential hard money loans. The funds can be used for practically anything. Depending on the lender, there may be no limit to the amount you can borrow. The funds are made available to you quickly. But, bridge loans are very short term solutions, typically not more than 6-24 months. So, you need to know where your long term financing is coming from.
Both private and commercial lenders might use other terms that you do not understand. The best advice: When you do not understand, ask for clarification. As mentioned above, some lenders simply forget that everyone is not familiar with the “lingo”. If a lender is unwilling to explain something to you fully, then you should probably seek another source for your residential hard money loans.
James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Guide, a comprehensive resource for those looking to secure funding for real estate projects.
Author: James Whitmore
Article Source: EzineArticles.com
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Financing for commercial real estate is a completely different game when compared to residential mortgage loans. It moves much faster and is much more flexible.
Commercial Real Estate – Hard, Hard, Hard Money Loans
When purchasing commercial real estate, financing is the most significant factor in determining whether the project is worth pursuing. Although there are a variety of commercial real estate loans on the market, we are going to look at hard money loans in this article.
Hard money loans for commercial real estate are often a matter of last resort. They aren’t good deals, but they can save a financing situation that has gone critical. Most hard money loans come with significant upfront costs and astronomical interest rates. When you are facing the prospect of losing a commercial property, however, they can be a godsend because they also are granted very quickly.
Hard money loans are considered very risky and are issued by private financing groups, not banks or lenders. The loans tend to be only available as the primary loan on the property, which isn’t that rare a situation in commercial property.
Unlike home loans, hard money loans are all about the potential sales price of a piece of commercial real estate. The party considering lending you money is not going to look at the appraised value of the property. They are going to look at the probably sales price if the commercial real estate has to be sold a few months after making the loan. Depending on the condition of the property, this figure will typically be between 50 and 75 percent of the appraised valued of the commercial property.
Put another way, a hard money loan is a short-term loan designed to get you past an immediate problem. It is undeniably a loan of last resort and is not an ultimate solution to a financing problem with a commercial property. It does nothing other than buy you time, and at a fairly hefty cost. If you are in a tight spot and can resolve the problem with a few extra months time, a hard money loan may be the answer.
Sergio Haros is with Great Western Mortgage – San Diego Mortgage Brokers – providing San Diego home loans. Great Western Mortgage is a San Diego mortgage company writing San Diego mortgages and San Diego refinance and home equity loan.
Author: Sergio Haros
Article Source: EzineArticles.com
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