September 28 2012

Former Democratic Senator: Obamacare Tax on Medical Devices Is a Looming Disaster

Charlotte Hays

Evan Bayh is a former Democratic governor and senator from Indiana, so we should take seriously his comments on the potentially disastrous results of the Obamacare tax on medical devices that takes effect in January.

Writing in today’s Wall Street Journal, Bayh notes:

The Supreme Court decision in June upholding the Affordable Care Act leaves in place a tax on medical devices that threatens thousands of American jobs and our global competitiveness. It will also stifle critical medical innovation in the industry that gave us defibrillators, pacemakers, artificial joints, stents, chemotherapy delivery systems and almost every device we depend on to save lives.

The 2.3% tax will be charged to manufacturers on each sale and takes effect in January. Many U.S. device companies, in response, have already announced layoffs, canceled plans for domestic expansion and slashed research-and-development budgets. This month, Welch Allyn—a maker of stethoscopes and blood-pressure cuffs—announced that it will lay off 10% of its global workforce over the next three years, but all of the jobs being cut are in the U.S.

Given the fragile state of the U.S. economy, Congress must move quickly to redress the harm from this tax before it becomes irreversible.

Bayh points out that the medical device industry has been a great American success story. Salaries are higher than average and the benefits to the sick can’t be estimated. The 2.3 per cent tax was based on a miscalculation: that sales in medical devices would increase after more people were insured by the Affordable Care Act. But most people who will use such devices were already insured by Medicare or private insurance. This was overlooked in the haste to pass the bill. There will be no surge.

Congress must act quickly to avert catastrophe. The House voted to repeal the tax in June, with 233 Republicans joined by 37 Democrats. No Democrat has yet stepped forward to support repeal in the Senate, though even Elizabeth Warren, the staunchly progressive senatorial candidate in Massachusetts, favors repeal. But there isn't much time.  

Comments
blog comments powered by Disqus