My View: Medical Device Tax Hurts Patients

Wednesday, February 11, 2015

Source: INDY Star

Patient harm was inevitable from a 2.3 percent tax on medical device sales in the U.S., just one unintended consequence of the Affordable Care Act.

Whether it was a delayed device to help crippled children walk or a mothballed breakthrough to reduce back pain, this tax has hurt American patients in the two years it has been in effect. When research and development budgets are trimmed and companies watch profits evaporate to pay a new tax, patients pay the steepest price.

Higher taxes on this industry mean conditions like diabetes, coronary disease and cancer will persist. Suffering will be prolonged. Fewer cures will be developed. Fewer lives will be saved.

For two years this tax has sapped value-added jobs and vitality from mature firms and start-ups alike, as it is applied whether a company has profits or not. Every 20 minutes, the equivalent of a $68,000-a-year job disappears from the balance sheet of a company in this sector. That's the toll of a tax that claims $1.8 billion a year from our nation's most innovative industry — the most recent estimate from the IRS.

This industry is a shining example of how American ingenuity can simultaneously save lives, create jobs and generate economic health for cities, states and regions. Medical device manufacturers directly employ 20,000 Hoosiers and indirectly support another 60,000 jobs, according to economists. These are high-paying jobs, too, and provide on average wages that are 56 percent higher than the average wage in Indiana.

The medical device industry brings us high-paying manufacturing jobs. About 420,000 workers are directly employed in the U.S. in this industry, and nationally wages are 40 percent higher than average, according to the trade group AdvaMed.

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