SAN JOSE, Calif. – Medical electronics companies are putting on a big push to get U.S. lawmakers to repeal a proposed tax on medical devices built into last year’s health care reform law.
More than 50 industry executives will participate in a lobbying campaign on Capitol Hill Thursday (Nov. 15). In a related effort, 805 people and organizations signed a letter to U.S. senators asking them to repeal the tax that starts in January and could cost up to $30 billion a year
The letter said the tax “will adversely impact patient care and innovation, and will substantially increase the costs of health care. It will continue to force affected companies to consider cutting manufacturing operations, research and development, and employment levels to recoup the lost earnings,” it said.
“At a time when elected officials are looking for more manufacturing jobs based in innovative industries, repealing this tax is a win-win for patients and workers,” said Mark Leahey, President and CEO of Medical Device Manufacturers Association (MDMA), speaking in a press release.
The medical device sector employs more than 400,000 workers nationwide, generates approximately $25 billion in payroll and invests nearly $10 billion in R&D annually, according to MDMA. The group estimates 80 percent of medical device makers in the U.S. have less than 50 employees and 98 percent have less than 500 employees.
There is little information in this article to decide the merits of this tax loophole. The best I can remember, it gave an unreasonable benefit to a few companies in the field. The larger the industry, the more lobbying that they do to get Congress to rule in their favor. That's why the tax code it 10's of thousands of pages long. I believe this tax item was put into the larger health care bill because the tax expenditure was calculated to have little positive effect, despite the outcry, and Congress needed the savings to actually cover people who were ill. Medical needs are pretty inelastic, so I expect most of this tax goes to increasing ROI for the vendors. Show me the numbers if you know more.
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