Two years ago this month, as public debate over Obamacare raged, former president Bill Clinton rushed to the hospital because of a heart condition. He immediately underwent a procedure to place two stents in one of his coronary arteries. It was a timely reminder about the dangers of stifling private-sector medical innovation. No one listened.
Stents don’t grow on trees. They were not created, developed, marketed, or sold by government bureaucrats and lawmakers. One of the nation’s top stent manufacturers, Boston Scientific, warned at the time that Obamacare’s punitive medical-device tax would lead to worker losses and research cuts. The 2.3 percent excise tax, the company said, “would be very damaging to Boston Scientific, and the medical device industry as a whole. In a nutshell, it would raise costs and lead to significant job losses. It does not address the quality of care but the political scorecard of savings.”
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Two years later, Bill Clinton’s doing just peachy. But many medical-device manufacturers are suffering, and many more are preparing for the worst as the White House gears up to collect an estimated $20 billion from the life-saving industry. In typical Obama-transparent fashion, the Internal Revenue Service quietly released a complex thicket of medical-device tax implementation rules in a Friday document dump earlier this month. Barring congressional intervention, the medical-device tax will go into full effect in 2013.
Cook Medical — which manufactures products for endovascular therapy, critical-care medicine and general surgery; diagnostic and interventional procedures; bioengineered tissue replacement and regeneration; gastroenterology and endoscopy procedures; urology, obstetrics, and gynecology — has called for the levy’s repeal. Cook Group chairman Stephen Ferguson noted the tax burden amounted to a whopping 55 percent of its profits.
“For a company like ours, which pays 35 percent of our net earnings in federal corporate taxes and another 4 to 5 percent in state and local corporate taxes, the excise tax translates to another payment that will consume 15 percent more of our earnings,” he estimated. “This creates tremendous pressure for us to move manufacturing to Europe and other parts of the world.” According to the trade publication Mass Device, the company has already canceled plans to build a new factory in the U.S. because of the Obamacare tax burden.
Stryker, a maker of artificial hips and knees based in Kalamazoo, Mich., announced in November that it would slash 5 percent of its global workforce (an estimated 1,000 workers) this coming year to reduce costs related to Obamacare’s taxes and mandates.
Covidien, a New York–based surgical-supplies manufacturer, recently announced layoffs of 200 American workers and plans to move some of its plant work to Mexico and Costa Rica, in part because of the coming tax hit.
Massachusetts-based Zoll Medical Corp., which makes defibrillators and employs some 1,800 workers in the U.S. and around the world, says the medical-device tax will cost the company between $5 million and $10 million a year. Its profit in 2009 was $9.5 million. “Running our company at close to break even would not be a sustainable position for us,” CEO Richard Packer said in a public statement, “so we will be forced to look at alternatives.”
Those “alternatives” include cutting payroll, cutting R and D, and passing on the costs to patients, of course. Industry estimates put the tax-induced job losses at 43,000. So far, the number-crunchers at 1600 Pennsylvania are mum on the number of potential jobs — and lives — destroyed by the medical-innovation death tax.
In fact, the Obama administration’s response so far has been a flippant shrug. Treasury Secretary Tim Geithner, whose only manufacturing claims to fame are faulty tax returns and near-double-digit unemployment figures, brushed off concerns this week about the medical-device tax. Obamacare’s expanded access to health care, he argues blithely, will create more consumers for their products. “On balance, it is a good package for people in the health-care business,” he told Bloomberg News.
Fewer jobs. Fewer entrepreneurs. Fewer medical advances. Only with a gallon of self-delusion does the Obamacare medical-tax medicine amount to anything other than economic and medical malpractice.
Obama 2012: Winning the future . . . by killing it.
Yes, all that you have written is accurate, intelligent and correct. But, it is also beside the point. Obama doesn't care about private initiative or corporate research because that stuff causes unfair differences in society. Some people prospering more than others is unacceptable to Lord Obama and he won't have that. If the government commands the economy Obama can tell us what to invent, how much to make and who gets to use it. Because Obama's government is fairness itself, everyone will benefit equally. What could possibly go wrong? Just kidding. Lord Obama's dream is missing just one little pertinent detail, people don't really perform well as cogs in a machine. People respond to incentives and if they see no reward potential they don't perform at a high level. They will in fact create a large underground economy with their intelligence, creativity and initiative (already happening) and the State Machine will decay as it did in the USSR. It's called human nature and massively ignorant people like Obama have no clue. Can we please make a six month 'working' visit to North Korea mandatory for all 'progressive' twits? Then, they can see with their own eyes that free everything means tons of nothing.
And let's not forget how much medical device manufacturers need to shell out on insurance and judgments because of torts gone wild. The single thing that could have by far the most major impact on reduction in the costs of healthcare in the US would be tort reform. And who's against it? Who fights tooth and claw against any sort of tort reform for anything whenever someone suggests it? Why, the American Trial Lawyers Association!
Let Bill Clinton or other scientifically-clueless "decision makers" suddenly find that they (or their family members) are not "doing just peachy" with socialism. Unfortunately, the rest of us will be in their unpeachy situation as well...Who is John Galt?
Nonsense. Pharmaceutical and medical technology companies should be regulated even more strictly. They also should be required to provide generic equivalents in a much briefer time frame. As for research, universities and government agencies such as CDC have the people, ideas and technology to carry it out. They would not be agents of profiteering.
Speaking as one from within the healthcare insurance field who knows, let me assure you that the healthcare system is not growing, it is contracting in anticipation at a rapidly accelerating pace. When the plan is implemented fully we can all say proudly that we have insurance. Unfortunately, few will ever again be able to obtain treatment as we have come to enjoy it. If you have medical treatment pending, get it done this year or next. Beyond that, all bets are off.
Why does no one ever make the point that the consumers who will end up paying this tax are the sick and vulnerable. This is not ax on rich corporations, this is a tax on the sick.
I was recently laid-off from a pharmaceutical company after 10 years and while company executive decision making, or lack there of, had the most to do with the layoffs, it's Obamacare and the gov't that that has lead the atrophy of the pharma industry. Drugs are routinely denied approval or delayed approval costing companies hundreds of millions of dollars that they will never recoup.
The industry regulator, PhARMA, has blindly done what ever Obama wanted. Leading up to the passing of Obamacare, they had all members agree to $80B in rebates and discounts and support for Obamacare, in hopes that they would be left alone for a while. I sent a letter to my companies Gov't Affairs department saying that they were foolish to do it and that if they thought that this bribe would satisfy Leviathan then they should lose their jobs. I told them that I would rather them fight Obamacare and I lose my job than have them give away my children's LIBERTY and future. Sure enough, about 2 months later in a congressional hearing Sec. Sebelius said that they were prepared to REDUCE pharma profits by $90B over the next 5-10 years. How do they do that? Either those profits are never made or the Gov't just confiscates them. In just the last week or so I saw an excerpt where Sebelius is demanding over $150B in discounts for Medicare and Medicaid over the next 10 years. I gues we all need to start stocking up on leeches for the bloodlettings to come.
If Obama is re-elected, the United States is over. I know most of our friends don't want to believe or even hear it, but not many people want to hear the truth. Lie to me as long as it feels good and I don't have to deal with reality. I may end up with fewer friends, but that makes the rationing easier.
God Bless the United States of America!
This is all part of the administration'a plans to rein in entitlement spending. First, reducing the volume of medical care saves Medicare. Second, reducing life expectancy saves Social Security.
Taxes can't be blamed for the low number of autopsies now performed in the US - which inhibits research and best practice. Doctors have no desire to see them done lest they be found to have mis-diagnosed, or that other conditions existed; insurance companies don't want them done, because the doctors are insured with them. With medical malpractice in the top five of major causes of death in the US, autopsies should be done far more regularly. As suggested elsewhere, this is a legitimate use of government funds - that could be afforded once the postal service is sold off.
I'm convinced this one of the ways the administration is using to save Social Security. All they have to do is kill us off once we reach retirement age and the projected costs go down.
