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Monday, March 26, 2012

Study: Obamacare Medical Device Tax Will Cost 39,000 Jobs And $2 Billion Personal Income

By Susan Duclos

A new study has been released prepared for the Advanced Medical Technology Association (AdvaMed)by Battelle Technology Partnership Practice, the study finds that a tax associated with Obamacare, scheduled to begin in 2013, on medical device manufacturers, will cause a loss of jobs for tens of thousands of workers, cost $2 billion in personal income for U.S. workers and more than $8 billion in national economic output.

As one of the 21 different tax increases associated with the Affordable Care act aka Obamcare which is is being challenged on constitutionality issues in the Supreme Court, (arguments started today), there is a tax on Medical Device Manufacturers (Tax hike of $20 bil/takes effect Jan. 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

The study shows the advanced medical technology industry is responsible for generating:

• Almost 1.9 million U.S. jobs; nearly 519,000 are industry jobs;
• More than $113 billion in personal income for U.S. workers; and
• Nearly $382 billion in national economic

In 2010, the industry generated export revenues in excess of $40 billion and a positive balance of trade of more than $3 billion.

The study estimates that an economic event resulting in a $3 billion decline in the industry’s direct output (such as the impending medical device tax) would cause the loss of:

• Nearly 39,000 U.S. jobs;
• More than $2 billion in personal income for U.S. workers; and
• More than $8 billion in national economic output.


A copy of the study can be found HERE.

According to the Medical Device Manufacturers Association (MDMA), the initial estimates of $20 billion have already ballooned to $30.5 billion. While the tax is not to be implemented until 2013, conveniently set after the November 2012 presidential election as are many of the 21 tax increases written into the Obamacare law, the effects are already being felt across the country.

Statement from the MDMA below:

While the 2.3% medical device tax isn’t scheduled for implementation until 2013, its impact is already being felt across the country on the two year anniversary of it being signed into law as a part of the Affordable Care Act. MDMA, the leading voice in opposing the device tax, reiterated its commitment to a full repeal, and noted the growing coalition working to do so.

“MDMA said from the beginning that the device tax would hamper job creation and patient care, and unfortunately we are already seeing this play out as companies plan for what is really a tax on innovation,” said Mark Leahey, President and CEO of MDMA. “As the voice of small and innovative medical technology entrepreneurs, we know of many companies who will be paying more in taxes than they earn in profits starting in 2013.”

Organizations such as the U.S. Chamber of Commerce, the National Association of Manufacturers (NAM), the National Federation of Independent Business (NFIB), the National Venture Capital Association and others have joined MDMA’s efforts to push for repeal. Leahey noted that the bipartisan support to repeal the medical device tax in Congress is recognition of how important it is for the United States to retain our leadership position in this dynamic industry.

“MDMA and our members remain committed to repealing this onerous provision of health care reform,” Leahey added. “This issue presents a clear opportunity for elected officials to support innovation and empower America’s entrepreneurs to improve patient care and create great jobs.”


In February 2012, a letter was signed by 70 Congressmen pushing for a House vote to repeal the medical device tax. The bill was sponsored by Congressman Erik Paulsen (MN) currently has strong bipartisan support, with 228 cosponsors.

There is momentum in the Republican controlled House for the repeal of this tax but the Democratically controlled Senate is dragging it's heels and has been referred to the Senate's Finance Committee.

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