Democrat Controlled Senate Votes to Repeal ObamaCare Medical Device Tax

Posted: Mar 22, 2013 7:41 AM

Apparently, the Senate thinks the medical device tax in ObamaCare is a pretty bad idea and voted to repeal it last night.

The Senate overwhelmingly passed a largely symbolic resolution calling for repeal of a 2.3 percent tax on medical device companies on Thursday, as more than 30 Democrats joined Republicans in approving it.

The tax helps to fund President Barack Obama's 2010 healthcare law. It applies to a range of medical products - from bedpans to expensive heart devices - many manufactured in the home states of the senators backing the repeal.

The Senate voted 79-20 to call for repeal of the tax, but the resolution is non-binding and will not change the levy. The symbolic measure will be attached to a non-binding budget measure drafted by Senate Democrats that is expected to pass on Friday.

Full repeal of the tax may be difficult to achieve, given its $30 billion price tag and the opposition of key Senate Democrats, including Majority Leader Harry Reid.

As a reminder of just how bad the medical device tax is, it's pretty much a tax within a tax that will not only kill jobs in the medical device industry, but will kill medical device innovation as well.

Not only does this tax increase costs on companies, it also increases costs on hospitals, doctors and people in need of medical treatment that requires medical devices to be used. As a consequence of this, biomedical or medical device engineering firms are already laying off workers who develop crucial medical products due to the "unforeseen" costs, or in other words, the costs of ObamaCare. Not to mention, the more money these companies pay to the government, the less money they have to invest in research and development.

With this new medical device tax, students who pay large sums of money to get degrees in the field of biomedical engineering, just like doctors, will no longer see the benefits of going into the field and therefore, we will have a shortage of engineers developing new medical device technology. The medical device tax is a death sentence for American medical innovation.

And where exactly does this tax hurt the most? When it comes to research and development of new products.

Medical-device manufacturers contend, however, that the potential problems go much further. While the tax may seem relatively small -- it would amount to $230 on the sale of a $10,000 medical device -- opponents note that it hits sales, not just profits, which increases its impact. Indeed, several medical companies say that the surcharge would eat into their profitability, at the expense of their research and development budgets. Large orthopedic device maker Stryker says that in anticipation of the tax, it plans to cut more than $100 million from its annual pretax operating costs next year. Smaller device maker Zoll Medical says the new surcharge will raise its overall rate above 50 percent and use up its entire R&D budget.

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