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ObamaCare Strikes Again

The opinions expressed by columnists are their own and do not necessarily represent the views of

"Nothing is so well calculated to produce a death-like torpor in the country as an extended system of taxation and a great national debt."

--William Cobbett

What is it with this administration -- a general envy and resentment of success ("You didn't build that!") or just a general incompetence at anything to do with basic economics? Like the old and bitter truth that the surest way to make something scarcer is to tax it.

The administration's latest victim is the American medical-device industry -- the people who make everything from body-scanning machines to catheters to glucose meters, anything regulated by the Food and Drug Administration. Like pacemakers, defibrillators, artificial joints, heart stents, chemotherapy delivery systems. ... If a medical device helps folks, the tax on every sale just went up 2.3 percent.

Yes, this is another sales tax, not an income tax. Which means it'll ac tually take a much higher percentage of these companies' incomes. Which in turn means there'll be fewer new medical devices (it takes profits to finance research and development) and more pink slips. And soon enough, less revenue for the government itself as the whole industry shrinks, and taxable income with it.

Obamacare turns out to be the gift that just keeps on taking. And every new exaction always comes as a surprise to the unwary. Taxes that were just going to hit the very rich -- those envied and resented 1 percent -- have a way of hitting those who need help the most. Or just the 99 percent in general. (The payroll tax just went up by 2 percent for every American who draws a paycheck.)

This time the victims are those companies -- and their employees -- who make medical devices. The new, higher tax on sales of their life-saving products will mean more layoffs, more companies moving offshore, and more markets lost to foreign competitors. And this country's technological edge in producing new and innovative medical devices will be whittled away as their manufacturers have to cut back on their research and development.

This isn't the way our president talks during election years: "We've got a tax code that is encouraging flight of jobs and outsourcing. And that's why we've specifically recommended ... that Congress change our tax code so that we stop giving tax breaks to companies that are moving to Mexico and China and other places, and start putting those tax breaks into companies that are investing here in the United States."--Barack Obama, October 12, 2004. But it's not what the president says that hurts; it's what he does. Like pushing taxes that encourage job flight and outsourcing.

If there's a way to discourage invention and innovation, drive up costs, eliminate jobs, help foreign competitors at the expense of American businesses, and generally make this weak economic recovery even weaker, you can bet this president will find it.

And just wait till the feds get the final word on all these new state-federal health insurance exchanges. As when they decide which conditions to cover and which not. Call it a division of labor: The state can take the blame for anything that goes wrong with these hybrids of state and federal health insurance, while Washington can claim credit for anything that goes right.

This new tax on medical devices, which took effect as of the first of the year, is one of the endless provisions of the ironically titled Patient Protection and Affordable Care Act, aka Obamacare. Like so many of its other taxes, regulations and/or restrictions, this one isn't likely to protect patients or make medical care any more affordable.

Quite the contrary. Because it's a sure way to drive up the cost of everything in health care from artificial joints to kits that test blood-sugar.

The only discernible effect of this new tax on medical devices, as with so many new taxes, will be to increase their price and decrease their availability. By 2.3 percent. At least. So much for affordable care and patient protection. This administration seems to know as much about economics as it does about medicine -- just enough to be dangerous. There's nothing wrong with this president's imagination; it's his connection to economic reality that seems tenuous at best.

It's enough to make a body wonder if the masterminds who dreamed up this tax on medical devices have ever practiced medicine themselves, or started a company, or thought through these brainstorms before enacting them into law. The one law sure to apply in the case of this new tax is the law of unintended consequences, aka Murphy's Law. ("Anything that can go wrong will go wrong.")

The case for this latest tax on health care is another triumph of creative accounting, and another defeat for common sense. Since so much of Obamacare's small print has yet to be revealed, or even written, there's no telling how many more taxes, regulations and penalties are still in the works. Oh, joy. Nancy Pelosi did say we'd have to pass Obamacare before finding out what all is in it, and, boy, are we. Tax after tax after tax.


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