Finding out what’s in it…
The medical device industry is one of many commanded to foot the bill for health care reform through increased tax burdens should the Supreme Court uphold the law commonly referred to as “Obamacare.” An excise tax of 2.3% on medical devices is scheduled to take effect in less than a year.
As it turns out, the original $20 billion price tag was a rather conservative estimate. A MassDevice.com analysis uncovered nearly $10 billion in additional expected tax revenue over 10 years, much higher than Congress originally estimated.
Industry experts and executives have been warning for at least 2 years that the effects of the med-tech tax will be detrimental to the American economy and more importantly to research and development in the medical device industry.
To combat the increase in overhead, senior executives of major med-tech companies have vowed to decrease spending on research and development, capital equipment purchases and will likely continue to cut employees in the U.S. Smaller companies scattered throughout the country may not be able to compete at all.
“The U.S. leads the world in developing and manufacturing medical products… the government is… implementing policies that will cut jobs in this sector and harm its competitive advantage – the development of innovative medical technologies,” said Tom Sommer, President of MassMEDIC, a med-tech industry group in Massachusetts.
How will the medical device tax affect you?
Increased prices for medical devices such as hip replacements and pace makers seem the likely targets, and since insurance companies will have to pay for those, there should be no concern for regular Americans, right? WRONG.
Also considered “medical devices” in the health care reform law are items such as dentures, electric breast pumps for new moms, female condoms, dialysis catheters, some wheel chairs, breast prosthetics following cancer surgery and much more.
Conceivably every American will experience the effects of the tax increase on “medical devices” if the Supreme Court upholds Obamacare.