Tax on Medical Devices


By taking this quiz I truly realized how little I know about the PPACA. Although I did score a 4/10, to be fair I would have to call all of my answers guesses. I find it quite amazing how little I know about one of the top, if not the single most common subject mentioned in the news. Now, I do take some responsibility for this, but I do not think it lies solely with me. We have talked all semester about the best way to present information for your audience, and it is clear that the government did not do an extensive job presenting this piece of legislation. Perhaps when something so relevant comes into law the government (like the PPACA) should go to extra lengths to ensure that the public is well informed to its purpose, or supposed purpose.

I found an interesting article on Forbes titled “Obamacare, will it make America sick?” The article starts by saying that the Social Security act in 1935 presented the largest shift in American social policy history. That piece of legislation contained about 15,000 words, where as the Affordable Care Act contained over 679,000 words! This means that most lawmakers had read only a little if any of the bill before it was passed. This to me is a crazy thought, the very people who decided to put this act into place most likely have not ACTUALLY read most of the act. I understand that legislative writing is different than your average essay. But I would bet that if tasked to do so, the writers of the act could easily trim some of the length of it, and maybe even make it a reasonable length.Image

One aspect of the act that I did not know was the medical device tax. Because of the large cost of Obamacare, there has been a tax placed on all manufacturers of medical devices of 2.3%. Meaning that these manufacturers will have to pay 2.3% of the sales price on all of their machinery that is sold. If this tax were in effect last year, 2012, the government would have received around $2.7 Billion from this tax alone. But, because of this tax, medical device manufacturers have laid off many workers in order to compensate for the burden of the tax. For example, Stryker, which is the 11th largest medical device manufacturer in the world had to furlough around 1000 employees. Stryker estimated that the tax will cost them about $100 million dollars next year. As a moderate conservative, I generally do not agree with more taxes and really do not like the loss of jobs that this tax has created. Therefore, I think that perhaps the tax should be lowered in order to lessen the burden placed on the medical device manufacturers.

The government wants us to think that the main purpose of the PPACA is to allow for all citizens to be afforded healthcare. My hope is that this is both the Brunhilda and the Mandingo of the act. The reason for passing the act should be the one that helps most people, and by forcing everyone to receive healthcare, the Obama administration strives to solve this country’s healthcare issues.

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One comment on “Tax on Medical Devices

  1. I wonder why Stryker, or any device maker, thinks they will have to cut back on production.

    Medical devices are not a luxury, I don’t think. So, the demand will stay there. Patients do not see the price. They don’t say “yeah, give me that cheaper knee replacement by Knees r us, not the Stryker one.”

    Maybe hospitals and doctors would not be willing to pay 2.5% more for MRI machines. But, given how we over-test and that is itself a source of costs, it may not be bad overall if there is a slight decline in device production.

    THe conservative viewpoint would like if some market pressure led to a more rational deployment of resources in the economy.

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