Medical Musings: A look beyond the hyperbole on the medical device tax


The hyperbole condemning the medical device tax in the Affordable Care Act is out of control. A headline in Forbes reads: "Obamacare's Medical-Device Tax Kills Patients, Not Just Jobs".

A 2.3% excise tax will be assessed on U.S. sales of Class I, II, and III medical devices starting Jan. 1 as part of the 2010 Affordable Care Act, which was recently upheld by a controversial 5-4 U.S. Supreme Court decision. The tax does not apply to items such as glasses that are bought at retail stores.

A survey of 42 members conducted by the Massachusetts Medical Device Industry Council (MassMEDIC) found that:
•44% of respondents stated that their companies would pass the cost of the new tax on to end users such as hospitals, clinics, purchasing organizations and doctors.
•39% of respondents stated that their companies would assume the cost of the tax, implementing internal cost reductions to meet revenue losses. That could mean job losses, cuts in R&D, and moving jobs offshore, according to the survey.
•49% said that the tax would have a 'significant impact' on their company's operations, while 75% said it would 'have an impact'.

The spin is that there will be tremendous job loss and reduction in R&D despite the significant increase in numbers of people covered by healthcare in the United States.

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