From the Bloomington Herald-Times:
Cook Group and its industry allies have received several shots in the arm lately in their crusade to repeal a 2.3 percent excise tax on the sale of medical devices.
The U.S. Senate voted 79-20 on March 21 to eliminate the tax. The resolution was nonbinding, but it did have bipartisan support. And it was backed by both of Indiana’s senators, Republican Dan Coats and Democrat Joe Donnelly. Coats spoke optimistically about the chances of the resolution sparking legislation that would actually repeal the tax during a visit to Bloomington last week.
“The 79 votes sent a real message, and I think it’s going to be successful,” Coats said at a Wednesday event organized by the Greater Bloomington Chamber of Commerce. “We now need to translate that into a law.”
The tax — and the manufacturer backlash against it — aren’t new. And the fight over it isn’t finished, either.
It started with the 2010 Affordable Care Act, the federal health care reform law often referred to as Obamacare. The act included a provision attempting to raise revenue by taxing 2.3 percent of the sale price of medical devices sold in the United States.
The tax doesn’t apply to products that consumers buy for their own use, such as eyeglasses or hearing aids. Instead, the levy goes on products like the ones Bloomington-based Cook Medical sells for hospitals to use.
Repealing the tax would cut revenue by about $29.1 billion over a 10-year period, according to a May 2012 estimate from the Congressional Budget Office. And medical device companies had to start paying the excise at the beginning of this year.
Paying the tax adds pressure on medical device companies that are already dealing with rising wages, material costs and health care costs, according to Steve Ferguson, chairman of the board of Cook Group.
So companies are looking at ways to compensate for rising costs. Those ways include cuts to major expenditures such as wages, capital projects or research and development, he said.
“The raw materials and all the rest of it is minor,” Ferguson said. “You can’t address this tax by cutting paper clips.”
That’s where hand-wringing comes from about the excise tax causing medical device companies to move their production overseas. Shipping production overseas wouldn’t allow companies to dodge the tax — it applies to any product sold in this country, whether it’s imported or domestic. But it might allow them to cut costs by using cheaper labor elsewhere.
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See the full article here:
http://www.heraldtimesonline.com/stories/2013/04/07/news.senate-vote-energizes-movement-to-repeal-tax-on-medical-devices.sto
