medical device tax Archives - Shopfloor

Senate Must Address Health Insurance Tax and Other Burdens Associated with the ACA—the Clock Is Ticking

By | Health Care, Shopfloor Policy, Taxation | No Comments

Efforts to stop the impacts of the onerous Health Insurance Tax (HIT) must continue as the Senate debates health care legislation. This $100 billion tax levied on fully insured health plans is paid by consumers and, if left unaddressed, will be a shock to retirees on Medicare Advantage and Part D plans as well as employers, individuals and families who purchase off-the-shelf health care plans. That tax will go into effect next year.

Manufacturers are fully behind repealing the “Cadillac” tax, the medical device tax, the health insurance tax and the pharmaceutical tax as well as reducing the burden of the employer mandate. The National Association of Manufacturers sent a key-vote letter to the Senate on Wednesday in support of Amendment 271 to underscore the importance of action on these issues. Unfortunately, the amendment failed in a 45–55 vote.

A full repeal of the Affordable Care Act (ACA) will help employers contain rising health care costs and provide much-needed predictability so that manufacturers can continue providing quality health care to employees. Manufacturers encourage the Senate to unlock the stranglehold of the ACA on manufacturers.

More in Congress Call for Urgent Repeal of the Medical Device Tax

By | Health Care, Shopfloor Policy, Taxation | No Comments

Co-authored by Christine Scullion, NAM Director of Human Resources Policy

For years, the National Association of Manufacturers (NAM) has been urging Congress to do away with the 2.3 percent excise tax on medical device manufacturers stemming from the Affordable Care Act (ACA) that threatens to hinder growth and innovation in this industry. Now, more members of Congress are joining in calling for a repeal of this onerous taxand fast!

The NAM has always strongly opposed industry- and product-specific taxes, as they serve to inhibit growth in targeted sectors and impede on the ability of  companies to compete in the global marketplace. The 2.3 percent tax applies to sales of taxable medical devices starting in January 2013, but thanks to the efforts of manufacturers and our friends in Congress, a two-year moratorium on the medical device tax was enacted. The moratorium runs out at the end of 2017, making swift repeal a priority.

Congressmen Erik Paulsen (R-MN) and Ron Kind (D-WI) have been leaders on this issue and have most recently introduced the Protect Medical Innovation Act of 2017 (H.R. 184) to repeal the medical device tax once and for all. A bipartisan majority of 245 members of the House have cosponsored H.R. 184. As another positive sign of support in the House, Congressman Jim Banks (R-IN) and 17 other members of the House freshman and sophomore class sent a letter to House Speaker Paul Ryan (R-WI) asking that H.R. 184 be put on the fast track toward passage and enactment.

On the other side of the Capitol, Senate Finance Committee Chairman Orrin Hatch (R-UT) and a bipartisan group of nine senators have introduced the Medical Device Access and Innovation Protection Act (S. 108), which also aims to repeal the medical device tax. The NAM strongly supports H.R. 184 and S. 108 and applauds the bipartisan, bicameral support the legislation has received.

While the effort to repeal and replace the ACA will be a considerable undertaking, the NAM is urging Congress to include full repeal of the law’s burdensome taxes on manufacturers, including the medical device tax, “Cadillac” tax and the health insurance tax in the upcoming budget reconciliation bill.


NAM Supports Bill to Repeal Health Insurance Tax

By | Health Care, Shopfloor Main, Shopfloor Policy | No Comments

The onerous Health Insurance Tax included in the Affordable Care Act (ACA) was delayed thanks to bipartisan congressional action in 2015, and now new efforts to permanently repeal the anticipated 2018 tax are in the beginning stages.

Today, Reps. Kristi Noem (R-SD) and Kyrsten Sinema (D-AZ) introduced important legislation that repeals section 9010 of the ACA, a provision that levies a $100 billion tax on fully insured health plans—the primary health care option for many small and medium-sized manufacturers. Although officially a tax on health insurance plans, it is a “pass-through,” and the obligation is placed directly on those who are purchasing full-insured health plans.

The NAM has long supported repeal of this tax as it raises the cost of health care and provides an additional burden for employers who are also struggling to manage the overwhelming health care mandates and paperwork demands required by the ACA.

Manufacturers are proud to provide health insurance benefits for their employees, and in fact, 98 percent of manufacturers provide health insurance. Repeal of this tax will offer needed relief for smaller manufacturers who want to maintain a healthy workforce and continue doing right by their employees. However, challenges from the ACA are making it increasingly difficult to do so.

No one understands the frustrations of our health care system quite like manufacturersrising health care and insurance costs are a top business challenge in our most recent Manufacturers’ Outlook Survey. The Competing to Win agenda and health care policy blueprint of the National Association of Manufacturers (NAM) calls on the next Congress and administration to find solutions that will successfully eliminate the costliest and most problematic aspects of the ACA. The NAM appreciates the leadership of Reps. Noem and Sinema and urges Congress not only to consider this important legislation but also include it in the upcoming budget reconciliation package, along with a repeal of the Cadillac and medical device taxes.

The New Billion Dollar Tax

By | Taxation | No Comments

The medical device industry made history this week when they passed the billion dollar mark in excise taxes paid to the IRS since January 1st, 2013. That comes to about $194 million per month. Needless to say, this is nothing to celebrate.  The money thats going to taxes is money medical device manufacturers would have used to invest in R&D, their facilities and most of all – new jobs.

As we’ve said many times before, this tax is not only a threat to innovation but also to the United States’ position as the global industry leader in medical devices. We appreciate the Senates 79-20 vote in March in favor of resolution to repeal the medical device tax and the bipartisan support for, “The Protect Medication Innovation Act” legislation in the House, which currently has 253 co-sponsors, and its related Senate bill, “The Medical Device Access and Innovation Protection Act,” that was introduced on a bipartisan basis by Senators Klobuchar (D-MN.) and Hatch (R-UT) and currently has 34 co-sponsors. We urge Congress to finish the job and get rid of this job-killing tax ASAP.

Manufacturers cannot afford for policy makers to sit back and continue to let the medical device tax take away from job creation, innovation and patient care. We hope that leadership in both the House and Senate understand that time is of the essence and work together to advance the repeal of this onerous tax.

California State Legislators Highlight Negative Impact of the for Medical Device Tax

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Kudos to the Democratic members of the California state legislature who recently sent a letter to the California delegation in the US House of Representatives expressing serious concern about the impact of the medical device excise tax. California has more than 1,200 medical technology companies —highest in the nation—which provide for nearly 72,000 jobs in the state. Recognizing that this tax is a direct threat to medical technology investment and innovation in California, the legislators urge Congress to repeal this onerous tax.

Many states are already feeling the negative effect the medical device tax has taken on the U.S. medical device industry, which currently is the global leader. This damaging trend will only get worse if Congress does not act. We hope that Leader Pelosi and the rest of the California delegation listen to these concerns and work together to find a solution to repeal this destructive tax.

A Big Thank You to Indiana for Weighing in Against the Medical Device Tax

By | Taxation | No Comments

Last week the Indiana Legislature sent a letter to President Obama and Congress with a resolution passed by the 118th Indiana General Assembly urging Congress to repeal the 2.3% medical device excise tax. Like other states, Indiana recognizes the enormous economic value that the medical device industry is providing for its communities in terms of good-paying jobs, R&D development and plans for further expansion of local facilities. As a result of the tax, more than 60,000 jobs are currently at risk in Indiana alone. We urge the Administration to seriously consider Indiana’s resolution and for Congress to take swift action to repeal this onerous tax.

The Administration Must Recognize the Real World Negative Consequences of the Medical Device Tax

By | Taxation | No Comments

We were disappointed to hear Treasury Secretary Jack Lew defend yesterday the onerous medical device tax that went into effect on January 1st as part of the Affordable Care Act. While Lew admitted that the idea behind the tax was not to target startup medical device companies, the reality is the 2.3 excise tax impairs innovation as it is imposed on all revenues rather than just profit. It is clear that Lew is out of touch with the greater comprehension of the harmful nature of the tax as just last month 79 senators voted in favor of its repeal, demonstrating strong bipartisan support during the budget debate.

The NAM urges the Administration to look at the real world effects the medical device tax is having on manufacturers competing in the global marketplace and to recognize the Senate’s strong vote as marker of bipartisan understanding that the tax is indeed hurting jobs, investment and the ability for the United States to maintain its position as the global leader in medical technology innovation.

The Downfalls of Taxing Innovation

By | Taxation | No Comments

Tomorrow the Ways and Means committee will mark up the Protect Medical Innovation Act of 2011 (H.R. 436), repealing the 2.3% excise tax on the gross sales of medical devices included in the health care reform law. Set to take effect in 2013, this excise tax is estimated to cost US businesses close to $30 billion in new taxes. This will effectively back companies into a corner to scale back operations and cut resources for R&D, thus stifling innovation and forcing job cuts.

This industry-specific tax will be particularly harmful for small to medium sized manufacturers (80 percent are companies with 50 or less employees, 98 percent have 500 employees or less), as the tax is assessed on a company’s sales rather than profits. In fact, many companies have already announced layoffs in anticipation of the effective date.

Medical device manufacturers have been a shining star throughout our economic recession and the US continues to be the world leader in manufacturing life-saving and life-enhancing treatments. We should not constrain this segment of the manufacturing community, but rather see that their success continues well into the future. The NAM strongly supports rolling back this tax before it takes effect.  We need to ensure that medical device manufacturers are able to remain dynamic and innovative in order to improve the quality of life of patients.

Avoiding a Tax Increase That’s Bad for Your Health

By | Taxation | One Comment

 We’re pleased to hear that early next month members of the House of Representatives will have the opportunity to vote to “excise” from the Internal Revenue Code, a new tax on medical devices set to begin in 2013. This ill-conceived 2.3 percent tax on gross sales of medical devices manufacturers was part of the health care reform law.

By increasing the costs of medical devices, the excise tax will hurt the companies and their workers and also stifle the research and innovation that leads to the development of medical products that contribute to the health and well-being of all Americans.

Moreover, as today’s Wall Street Journal points out, perhaps the most damaging impact of the excise tax is on U.S. competitiveness. With Europe, Israel and Asia working hard to take over the United States’ lead in the life sciences, a tax like this will only make their job easier. Let’s hope the House gets the ball rolling and Congress sends a bill to the White House as soon as possible that would stop this job-killing tax before it even starts.

Impact of Health Care Law: Less Innovation in Medical Devices

By | Health Care, Innovation, Taxation | No Comments

It’s hard to imagine the discussions that went into the writing of the legislation to expand the federal government’s role in health care, the Patient Protection and Affordable Care Act:

But how do we pay for all this?

Well, our medical device industry is the global leader, innovating and really stimulating economic growth.

Good, let’s tax it!

Which leads us to this entry in the new report from Sens. Tom Coburn (R-OK) and John Barrasso (R-WY), both doctors, “Grim Diagnosis – A check-up on the federal health law.”

Companies that innovate, create, and develop life-saving, life-improving devices will likely lose jobs too. Manufacturers of medical devices are reeling from a provision of the law that will levy a $20 billion excise tax on their industry. The Boston Globe reported that the 2.3 percent excise tax on companies that supply medical devices like heart defibrillators and surgical tools to hospitals, health centers and ambulance services, will force industry leaders to lay off workers and curb the research and development of new medical tools. One CEO said the new tax threatens his business‘ sustainability because it has relegated his company‘s profitability to merely a break-even position.

The basic problem with the tax is one of math. Many small to midsize medical device companies will owe more to the federal government in taxes than they make in profits, according to Mark Leahy, head of the Medical Device Manufacturers Association. “We’re talking about a 2.3 percent tax on total sales, irrespective of whether a company is making a profit.” The device tax will hamper innovation, since the amount of money available for a company to reinvest in its business development will be reduced. Some companies are already contemplating moving jobs overseas to avoid losing their competitive edge. Outsourcing is just one of many adverse unintended consequences of the new law.

The news release is, “Drs. Coburn and Barrasso Release New Health Care Report.” Jobs will be lost.