Skip to comments.This medical device tax to help pay for Obamacare is just not going to end well
Posted on 11/15/2012 12:56:35 PM PST by SeekAndFind
Conventional wisdom: If you want less of something, put a tax on it. Obamanomics wisdom: Put a tax on... medical devices?! I.e., add another barrier to the industry whose slightest innovations can directly result in streamlined costs, improved efficiency, better health-care options, and saved lives? What the what?
Embedded within the shadowy depths of the Patient Protection and Affordable Care Act (sometimes, I like to use its official name just to re-appreciate the irony of "patient protection" and "affordable") is a 2.3 percent excise tax on the sale of taxable medical devices by the manufacturer/importer --- and it's no small thing. Happening now:
Medical device executives will descend on Capitol Hill today to press members of Congress to address the 2.3% medical device tax before it takes effect in January. ---
"Without action from Congress, implementation of the medical device tax will cost our economy thousands of high paying jobs," MITA executive director Gail Rodriguez said in prepared remarks. "These job losses will directly impact patient access to the most advanced, life-saving medical technologies available." …
The letter includes support from physician groups, venture capital firms and other organizations asking the Senate to repeal the 2.3% levy on medical device sales, which device makers will start paying in at the start of next year.
The tax won’t actually hit until this January 1st, but the repercussions are already making themselves felt in the industry. Some more startling details from industry experts, via Politico:
Medical innovation is key to providing cutting-edge, lifesaving technologies to patients. Between 1980 and 2000, new diagnostic and treatment tools helped increase life expectancy by more than three years. But the new tax will take money from our research and development pipelines, reducing our ability to discover and develop lifesaving medical devices such as heart valves, molecular diagnostic tests and MRI machines.
Many of the novel, cutting-edge medical technology innovations come from small companies with very few employees. Unfortunately, the medical device tax will hit these small companies and startups hardest, because it will be applied on sales, regardless of whether a company is making any profit. Small businesses often suffer losses in the early years of operation when they are investing in research and development on new products. Paying a sizable new tax while incurring traditional startup-driven losses will be more than many small businesses can bear. …
This innovation tax also targets an American manufacturing sector created by companies choosing to locate in the United States even as markets grow beyond our borders. … The U.S. accounts for 40 percent of the global medical technology market. We have a $5.4 billion trade surplus because American workers create high-tech, top-quality medical devices…
And yet, this tax threatens these gains. At least three studies have estimated the tax will cost tens of thousands of jobs by one estimate as many as 43,000 jobs.
If the Democrats’ real goal with ObamaCare is really all about bringing down medical costs and improving patient care, they’ve sure got a funny way of showing it. The logic eludes me.
In other ObamaCare-related news, here’s yet another new study confirming the oncoming disincentives for doctors to go into primary care, via ABC. …We haven’t even finished writing ObamaCare — I can hardly wait to see what kinds of good times we’ll have once this thing actually gets officially started.
The United States will require at least 52,000 more family doctors in the year 2025 to keep up with the growing and increasingly older U.S. population, a new study found.
The predictions also reflect the passage of the Affordable Care Act — a change that will expand health insurance coverage to an additional 38 million Americans.
“The health care consumer that values the relationship with a personal physician, particularly in areas already struggling with access to primary care physicians should be aware of potential access challenges that they may face in the future if the production of primary care physicians does not increase,” said Dr. Andrew Bazemore, director of the Robert Graham Center for Policy Studies in Primary Care and co-author of the study published Monday in the Annals of Family Medicine.
Obamacare is crap from start to finish, unless you are one of Obama’s chosen few. Everyone else has to pay for it.
If the companies lease the equipment, do they have to pay the tax?
I think most of this is for implant devices, not portable equipment.
Years ago I asked someone in the industry why no medical device makers had been outsourcing to China, India, etc. He repied “Who wants to be heading into the O.R. to get a pacemaker that was made in China”?
Now, I guess we’re going to find out...
"Without action from Congress, implementation of the medical device tax will cost our economy thousands of high paying jobs," MITA executive director Gail Rodriguez said in prepared remarks. "These job losses will directly impact patient access to the most advanced, life-saving medical technologies available."
The Medical Imaging and Technology Alliance (MITA) figured in April 2010 that the crocodile would eat them last when they cheered Obamacare while expressing concern over the tax:
MITA Statement on Health Care Reform
Rosslyn, Va. The Medical Imaging & Technology Alliance (MITA) said that the historic health care reform law will alter the trajectory of our nations health care delivery system by expanding medical coverage to Americans who could not access or afford insurance.
MITA supports the 75 percent utilization assumption provision in the bill as an important improvement over the 90 percent utilization rate assumption put forward by the Centers for Medicare and Medicaid Services (CMS) in their 2010 physician fee schedule, said Dave Fisher, Executive Director of MITA.
MITA and its members will continue to closely monitor these reimbursement reductions coupled with additional cuts made in 2007 and practice expense cuts implemented by CMS this year to determine if these significant changes will adversely affect beneficiaries access to life-saving diagnostic services.
Further, the new medical device tax included in the new law remains a concern for MITA and its member companies due to its potential to stifle medical innovation, create additional job layoffs and reduce patient access to quality care, Fisher said.
As the implementation of the health reform law begins, MITA remains committed to working closely with Congress and the Administration to monitor and evaluate how these changes impact patients, providers, and our member-company employees. Moreover, MITA and its members also look forward to working with Congress and the Administration to ensure that physician-developed appropriate use guidelines are used at the point of care. As a long-time supporter of developing and using appropriateness criteria for imaging services, we believe these guidelines together with an education and confidential feedback program to report patterns of adherence to those criteria will provide CMS with necessary information to limit inappropriate imaging while maintaining patients access to needed imaging services that saves lives, improve quality of care and reduce health care costs, Fisher said.
(Source: April 7, 2010 Press Release: MITA Statement on Health Care Reform)
The tax is applied at the manufacturer.
Sold or leased equipment—it already gets taxed at the source factory.
How can this be? Obama care is going to cut expenses, a Tax is not a cut in expenses?
It’s all good.
Anything that kills people sooner helps out SocSec and Medicare.
And more quickly reduces the number of old white people who tend to vote Republcan.
The Dems are smarter than we give them credit for, LOL.
Taxing medical devices will produce less product, so extending lifespans will be stopped, somewhat.
Medical devices, be it knees, heart valves or prosthetic arms helps people’s lives, Liberals want us dead.
Most medical device companies barely clear 6% profit. For Obama to take 2.3% of that means these companies no longer find it profitable to stay in business. I know of two major companies that have met since the election to discuss the closing of the companies.
Here are the Medical Device Company Layoffs America Voted for on November 6, 2012:
Let’s examine the very real jobs that will be lost, and the very real lives that will be affected.
Welch Allyn, a company that manufactures medical diagnostic equipment in central New York, announced in September that they would be laying off 275 employees, or roughly 10% of their workforce over the next three years. One of the major reasons discussed for the layoffs was a proactive response to the Medical Device Tax mandated by the new healthcare law.
Dana Holding Corp.
As recently as a week ago, a global auto parts manufacturing company in Ohio known as Dana Holding Corp., warned their employees of potential layoffs, citing “$24 million over the next six years in additional U.S. health care expenses”. After laying off several white collar staffers, company insiders have hinted at more to come. The company will have to cover the additional $24 million cost somehow, which will likely equate to numerous cuts in their current workforce of 25,500 worldwide.
One of the biggest medical device manufacturers in the world, Stryker will close their facility in Orchard Park, New York, eliminating 96 jobs in December. Worse, they plan on countering the medical device tax in Obamacare by slashing 5% of their global workforce - an estimated 1,170 positions.
In October of 2009, Boston Scientific CEO Ray Elliott, warned that proposed taxes in the health care reform bill could “lead to significant job losses” for his company. Nearly two years later, Elliott announced that the company would be cutting anywhere between 1,200 and 1,400 jobs, while simultaneously shifting investments and workers overseas - to China.
In March of 2010, medical device maker Medtronic warned that Obamacare taxes could result in a reduction of precisely 1,000 jobs. That plan became reality when the company cut 500 positions over the summer, with another 500 set for the end of 2013.
A short list of other companies facing future layoffs at the hands of Obamacare:
Smith & Nephew - 770 layoffs
Abbott Labs - 700 layoffs
Covidien - 595 layoffs
Kinetic Concepts - 427 layoffs
St. Jude Medical - 300 layoffs
Hill Rom - 200 layoffs
Beyond the complete elimination of a significant number of American jobs is another looming problem created by the health care law - a shift from full-time to part-time workers.
Sean Hackbarth of Free Enterprise explains:
A JP Morgan economist “points out that 8.3 million people are working in part-time jobs even though they’d prefer full-time work. Unfortunately, because of President Obamas health care law, the Patient Protection and Affordable Care Act (PPACA), workers in the hotel, restaurant, and retail industries could be pushed into part-time jobs working less than 30 hours per week.”
“Under the health care law, if a company has more than 50 full time equivalent workers, a combination of full and part-time employees, but doesnt offer affordable coverage that meets the governments minimum value standard, the company will have to pay a penalty. This penalty is determined by the number of full-time employees minus 30 full-time employees. So to reiterate a very important point: part-time workers are not part of the penalty formula. The health care law creates a perverse incentive to hire part-time versus full-time workers.”
Tangible examples of Obamacare causing a reduction in full-time workers:
According to the Orlando Sentinel, Darden Restaurants, a casual dining chain best known for their Red Lobster, Olive Garden and LongHorn Steakhouse restaurants, is “experimenting with limiting the hours of some of its workers to avoid health care requirements under the Affordable Care Act when they take effect in 2014”.
JANCOA Janitorial Services
The CEO of JANCOA, Mary Miller, testified to Congress that Obamacare was a “dream killer”, adding that one option she had to consider “is reducing the majority of my team members to part-time employment in order to reduce the amount that I will be penalized.”
The American retailer in Cincinnati, Ohio recently was reported to be planning a significant slashing of their hourly workers. Doug Ross writes:
Operative Faith (a mid-level manager with the company) reveals that Kroger will soon join the ranks of Darden Restaurants and slash the hours of its non-exempt (hourly) workers to avoid millions in Obamacare penalties.
According to the source, Obamacare could result in tens of thousands of Kroger employees being limited to working 28 hours per week.
This is by no means, meant to be an exhaustive list. But it is meant to provide examples of real companies, real jobs, and real names, soon to be added to the growing list of employment casualties provided by the inevitable implementation of Obamacare.
Last night, America voted for four more years of President Obama and his destructive economic and health care policies. By extension, America last night voted their approval of the aforementioned layoffs and overall work reduction.
Now we must accept the inevitable. Welcome to mourning in America.
In ‘08, I saw a clip of Holdren or Sunstein talking about reusing prosthetics and other medical devices.
How about that.
Some guy was talking about converting the dead into green goo and shooting them into space. I kid you not.
This communist doesn’t give a damn about Americans except to dictate his sick policy of converting America to a third rate nation.
Recall that one of the primary "objectives" of Obamacare was to reduce the cost of health care.
However, in order to reduce the cost of health care, it was necessary to tax it.
See, it makes perfectly good sense...