The Heart Attack Tax

ObamaCare’s Medical Device Tax Devastating To Businesses Developing Life-Saving Cardiac Defibrillators and Pacemakers

• It’s becoming increasingly clear that nothing is safe from ObamaCare’s tax hikes. Tucked away in ObamaCare was a “heart attack tax,” a new levy on medical devices such as cardiac defibrillators or pacemakers that could be devastating to businesses developing life-saving medical innovations.
• Many small business job creators have already suffered from the creation of this tax, and some medical device companies have been forced to ship jobs overseas because of it.
• Even some Democrats are coming to recognize that this brutal ObamaCare tax will destroy small businesses and increase healthcare costs. But if the past is any indication, Democrats will once again defend their failed healthcare law instead of repeal its obvious failure.

It’s becoming increasingly clear that nothing is safe from ObamaCare’s tax hikes. Tucked away in ObamaCare was a “heart attack tax,” a new levy on medical devices such as cardiac defibrillators or pacemakers that could be devastating to businesses developing life-saving medical innovations:

OBAMACARE’S “HEART ATTACK TAX” WOULD TAX “EVERYTHING FROM CARDIAC DEFIBRILLATORS TO ARTIFICIAL JOINTS TO MRI SCANNERS”: ” ‘Taxmageddon’ isn’t only about the half-trillion-dollar blow to the economy that arrives in 2013 on the end of the Bush-Obama tax rates. Several of the Affordable Care Act’s worst tax increases kick in too, such as the new excise tax on medical devices. The 2.3% levy applies to the sale of everything from cardiac defibrillators to artificial joints to MRI scanners.” (Editorial, “Improvised Explosive Device Tax,” The Wall Street Journal, 5/28/2012)

“COMPANIES AT MAKE-OR-BREAK MARGINS COULD BE TAXED OUT OF EXISTENCE,” ESPECIALLY START-UPS AND MID-SIZED FIRMS: “The device tax is supposed to raise $28.5 billion from 2013 to 2022, and it is especially harmful because it applies to gross sales, not profits. Companies at make-or-break margins could be taxed out of existence, especially in an intensely competitive industry where four of five businesses are start-ups or midsized.” (Editorial, “Improvised Explosive Device Tax,” The Wall Street Journal, 5/28/2012)

THE TAX COULD HIT PACEMAKERS, STENTS, ELASTIC BANDAGES, ARTIFICIAL HIPS AND KNEES: (Susan Kelly, “Medical Device Tax May Spur Price Hikes, Cost Cuts,” Reuters, 4/18/2012)

TAX WILL MEAN “FEWER PAIN-REDUCING AND LIFE-EXTENDING INVENTIONS”: “So the 2.3 percent tax, unless repealed, will mean not only fewer jobs but also fewer pain-reducing and life-extending inventions — stents, implantable defibrillators, etc. — which have reduced health-care costs.” (George Will, “Taxing Jobs Out of Existence,” The Washington Post, 5/9/2012)

MEDICAL INDUSTRY: “TAX WILL STIFLE INNOVATION AND SEND JOBS OVERSEAS”: (Susan Kelly, “Medical Device Tax May Spur Price Hikes, Cost Cuts,” Reuters, 4/18/2012)

TAX IMPACT IS DOUBLE THE SIZE OF TOTAL ANNUAL RESEARCH AND DEVELOPMENT BUDGET IN MEDICAL DEVICES: “The 2.3 percent tax will be a $20 billion blow to an industry that employs more than 400,000, and $20 billion is almost double the industry’s annual investment in research and development.” (George Will, “Taxing Jobs Out of Existence,” The Washington Post, 5/9/2012)

Many small business job creators have already suffered from the creation of this tax, and some medical device companies have been forced to ship jobs overseas because of it:

HEALTHCARE LEADERSHIP COUNCIL: 43,000 MEDICAL DEVICE INDUSTRY WORKERS COULD BE LAID OFF BY TAX HIKE: “Under reasonable assumptions, the tax could result in job losses in excess of 43,000 and employment compensation losses in excess of $3.5 billion.” (“Employment Effects of the New Excise Tax on the Medical Device Industry,” Healthcare Leadership Council, September 2011)

MEDICAL INDUSTRY STUDY PREDICTS 39,000 JOBS LOST: “A $3 billion hit on the medical device industry — roughly the effect of the healthcare reform law’s industry tax — would cost nearly 39,000 jobs and more than $8 billion in economic output, according to a new report released Monday by the Advanced Medical Technology Association (AdvaMed).” (Julian Pecquet, “Medical Device Makers Decry Cost of Tax,” The Hill, 3/26/2012)

SEVERAL MEDICAL DEVICE COMPANIES ARE ALREADY OUTSOURCING JOBS AND LAYING OFF WORKERS: “Cook Medical is no longer planning to open a U.S. factory a year. Boston Scientific, planning for a more than $100 million charge against earnings in 2013, recently built a $35 million research and development facility in Ireland and is building a $150 million factory in China. (Capital goes where it is welcome and stays where it is well-treated.) Stryker Corp., based in Michigan, blames the tax for 1,000 layoffs. Zimmer, based in Indiana, is laying off 450 and taking a $50 million charge against earnings. Medtronic expects an annual charge against earnings of $175 million.” (George Will, “Taxing Jobs Out of Existence,” The Washington Post, 5/9/2012)

SOME MEDICAL DEVICE MAKERS, INCLUDING SMALL BUSINESSES, “HAVE ALREADY ANNOUNCED LAYOFFS AHEAD OF THE TAX”: (Susan Kelly, “Medical Device Tax May Spur Price Hikes, Cost Cuts,” Reuters, 4/18/2012) 

“MEDICAL DEVICE TAX MAY SPUR PRICE HIKES”: “Raising prices and cutting spending are among the steps medical device makers are considering to offset the impact of a new U.S. excise tax on the devices, set to take effect in 2013, according to a survey by global accounting and audit firm KPMG.” (Susan Kelly, “Medical Device Tax May Spur Price Hikes, Cost Cuts,” Reuters, 4/18/2012)

61% OF MEDICAL DEVICE COMPANIES EXPECT TAX TO HURT THEIR ABILITY TO GROW: (Susan Kelly, “Medical Device Tax May Spur Price Hikes, Cost Cuts,” Reuters, 4/18/2012)

“DEVICE MAKERS WILL PASS ON THE TAX” TO CONSUMERS; RESULT: “LESS INNOVATION, FEWER JOBS, HIGHER HEALTH CARE COSTS”: “To the extent they can, device makers will pass this tax on to the hospitals and provider purchasing groups that buy their products, which will ultimately show up in insurance premiums. Or they’ll offset the costs with layoffs or by slashing research and development. Less innovation, fewer jobs, higher health costs—the usual ObamaCare trifecta.” (Editorial, “Improvised Explosive Device Tax,” The Wall Street Journal, 5/28/2012)

Even some Democrats are coming to recognize that this brutal ObamaCare tax will destroy small businesses and increase healthcare costs. But if the past is any indication, Democrats will once again defend their failed healthcare law instead of repeal its obvious failure:

12 HOUSE DEMOCRATS HAVE ALREADY SIGNED ON FOR REPEALING THE TAX: “Minnesota Republican Erik Paulsen’s device tax repeal bill has 238 cosponsors, including a dozen Democrats.” (Editorial, “Improvised Explosive Device Tax,” The Wall Street Journal, 5/28/2012)

DEMS HAVE REPEATEDLY PROVED THEY WON’T REPEAL OR EVEN FIX OBAMACARE:

98% OF HOUSE DEMS VOTED AGAINST REPEALING OBAMACARE: (Roll Call 14, Clerk of the U.S. House, 1/19/2011)

95% OF HOUSE DEMS VOTED AGAINST REPEALING OBAMACARE SLUSH FUNDS: (Roll Call 264, Clerk of the U.S. House, 4/13/2011)

95% OF HOUSE DEMS VOTED AGAINST REPEALING FUNDS FOR OBAMACARE STATE EXCHANGES: (Roll Call 285, Clerk of the U.S. House, 5/3/2011)

97% OF HOUSE DEMS VOTED AGAINST REPEALING FUNDS FOR OBAMACARE HEALTH CENTERS: (Roll Call 290, Clerk of the U.S. House, 5/4/2011)

83% OF HOUSE DEMS VOTE AGAINST REPEALING FISCALLY DISASTROUS “CLASS” PROGRAM: (Roll Call 18, Clerk of the U.S. House, 2/1/2012)

90% OF HOUSE DEMS VOTED AGAINST REPEALING IPAB: (Roll Call 126, Clerk of the U.S. House, 3/22/2012)

87% OF HOUSE DEMS VOTED AGAINST REPEALING OBAMACARE SLUSH FUNDS TO PREVENT STUDENT INTEREST RATE HIKES:  (Roll Call 195, Clerk of the U.S. House, 4/27/2012)