A piece of Obamacare imposes a tax on medical device manufacturers. Members of Congress now seem horrified. It is almost as if “someone” hid this provision from them…except, they are the “someone” that wrote it and passed it.
Obamacare imposes a 2.3% excise tax on medical device manufacturers. Q-tips and eye glasses are exempt, but not much else. The insidious part is that the tax is imposed upon gross sales, not on the manufacturer’s profits. So, if a manufacturer today has only a 2% profit margin, as many small manufacturers do, now what?
…the Internal Revenue Service is now writing rules that will treat some of medicine’s most inventive and complex products the same way it does gas, cigarettes, liquor and wine, guns, airline tickets and tires. Those are the commodities on which the political class normally attaches excise taxes, and the appeal is that the levies are hidden in higher prices, rather than listed separately like a sales tax. This is somewhat awkward for a law that claims to aspire to make health care more ‘affordable.’
But, there is a problem.
The providers will also be hurt from the device tax because of something they don’t like to mention, which is the government’s price controls. Medicare and Medicaid pay fixed rates per procedure, such as replacing a hip, and the rates don’t change when device prices do. So a hospital that must buy a higher-cost joint due to the device tax will have a smaller share of the reimbursement.
Springing to the rescue is none other than Elizabeth Warren, (D. Ma.), who the Wall Street Journal affectionately calls “the liberal papoose”, and Senator Al Frankin (D. Mn.). Both are urging the passage of bills that will kill this tax.
Why, these two you ask?
Massachusetts is the home of many small, start up medical device manufacturers and this excise tax could put them out of business. Minnesota is the home of Medtronics, one of the largest medical device manufacturers in the country.
Where will these companies and their groundbreaking innovations go?
Overseas, of course.
Gee, and all the time I thought President Obama was trying to create jobs in this country and lower the cost of health care.