Repeal of the Medical Device Tax

The U.S. House of Representatives recently voted to repeal the Medical Device Tax, which is part of the healthcare reform package of 2010.   Critics of the tax argue that it will hurt job growth, and possibly increase the cost of healthcare to patients.

What is the Medical Device Tax?

The Medical Device Tax is an excise tax, meaning —according to critics– that it will not raise considerable revenues, but it will reduce the use of medical devices. The tax, to take effect in January, was designed to help subsidize some of the costs associated with expanding healthcare coverage for Americans without healthcare. The tax, which will be derived from roughly 2.3 percent of the sale price on medical devices, is projected to bring in revenues of $29 billion dollars between 2013 and 2023.  It will be applied to all medical devices manufactured and imported into the U.S.

The Argument Against the Medical Device Tax

The economic argument against the Medical Device Tax is simply that the American government is global leader in the development, manufacturing and innovation of medical technology. With the new tax to hit American companies at a time when the economy is sluggish, at best, could result in domestic layoffs for American workers. Or, worse, American companies will move their manufacturing activities offshore and close their company’s domestic operations altogether. Critics note that some companies already have plans to reduce their number of employees in anticipation of the tax.

Question: How is your organization preparing for this “new normal” environment?

Image courtesy of Fibonacci Blue