Congress to vote on ‘job killing medical device tax’

Stephen Elliott Contributor
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Congress is set to vote on a bill Thursday that would repeal part of President Barack Obama’s health care reform law, specifically a tax on medical device manufacturers set to go into effect in six months.

Minnesota Republican Rep. Erik Paulsen, the bill’s sponsor, and Georgia Republican Rep. Phil Gingrey, a co-sponsor, hosted a conference call about the bill Thursday with NuVasive CEO Alexis Lukianov, a medical device manufacturer that will be affected by the new tax.

The host of the call referred to the tax as the “job killing medical device tax.” Paulsen cited estimates that 80 percent of the jobs affected will be from small businesses. Lukianov claimed that if the tax stands, it will cost his San Diego-based company $14 to 15 million next year, translating to roughly 200 jobs.

According to Paulsen, the medical device industry includes some 430,000 jobs, and the tax may affect up to 10 percent of them, or 43,000 jobs.

Gingrey, a doctor in Atlanta for more than 25 years before being elected to Congress, called the tax “counterproductive to job creation” and a “burden on patients.” The tax will be passed on to patients who will have to pay extra to make up the tax burden, he said.

Beyond job creation, Lukianov said the tax may severely constrict innovation.

According to Lukianov, his company NuVasive has been able to make spine surgery nearly an outpatient procedure through rapid technological innovation over the last decade. With the tax, that innovation would be much more difficult.

When pressed about the Obama administration’s claims that the new health care law would provide 30 million new customers to the health care industry, Lukianov cited anecdotal evidence from colleagues in Massachusetts, who said the state’s health insurance mandate provided no substantial increase in customers or revenue.

Further, the new customers would mostly be young, since Medicare covers elderly patients. Most of the medical device manufacturers create products for the elderly, said Lukianov, so the new patients would likely not benefit these manufacturers.

The bill is likely to pass in the House of Representatives Thursday, according to Paulsen and Gingrey, but it is unclear if it will pass the Senate with the threat of a presidential veto looming.

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