From David Patin in the Bloomington Herald-Tribune:
Now that the Supreme Court has upheld the Affordable Care Act there is one feature of the act that congress should repeal. The revenue tax on U.S. made medical devices. Disclosure: I’m employed at a local medical device manufacturer, but as a staunch liberal, I’m not against taxes, just this tax.
The possible impact of this tax on the industry has been widely discussed and need not be rehashed here. Instead, there are two arguments against the tax that I have not seen discussed that are persuasive.
The purpose of the tax is to provide funds to evaluate the effectiveness of different procedures. Effective procedures will be funded, others not. In 2007, the total value of industry shipments for U.S. -manufactured medical devices was valued at $98 billion.
A 2.3 percent tax represents over $2 billion. With the inevitable loopholes and exceptions to the tax, such as startups and critical life saving medical devices, this tax is very likely to raise over $1 billion a year to fund research. While the government does many things right, is there reason to think this would be one of them?
The first few years could see some results, but as bureaucratic lethargy sets in, this department will become less and less effective. What influence will lobbying by specific companies have on which studies are conducted? Will there be resistance to including foreign companies in the tests? We have already seen in FDA decisions that issues of women’s health get politicized. How could this department avoid the same fate?
A second problem is that this tax is quite possibly both obsolete and premature at the same time. Of the 15 industrialized nations, 14 have some form of national health care system. Each of those 14 countries pays one half to one third for health care what the U.S. pays.
Contrary to conservative dogma, it is not because their citizens wait weeks to see a doctor and months for minor surgery. Using standard health care measures such as infant mortality and life expectancy, their citizen’s fare better than us with those lower costs. Will we see a reduction in health care costs as the incentive to not pay benefits is reduced?
Common estimates put the cost of chronic care at 75 percent of all health care dollars, some portion of that will be reduced through better preventive treatment which this act provides. In the absence of anything definitive, it might be best to take a wait and see attitude, especially since the impact of this tax on an industry that is ideally suited for American workers is unknown.
Bottom line, and that’s what taxes generally hit, there is no upside to this tax.
http://www.heraldtimesonline.com/stories/2012/07/15/digitalcity.no-upside-to-tax-on-medical-devices.sto
