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Townhall...
Taxing Medical
Progress to Death
by Michelle Malkin
Feb 17, 2012
Two years ago this month, as public debate over Obamacare raged, former
President Bill Clinton rushed to the hospital because of a heart
condition. He immediately underwent a procedure to place two stents in
one of his coronary arteries. It was a timely reminder about the
dangers of stifling private-sector medical innovation. No one listened.
Stents don’t grow on trees. They were not created, developed, marketed
or sold by government bureaucrats and lawmakers. One of the nation’s
top stent manufacturers, Boston Scientific, warned at the time that
Obamacare’s punitive medical device tax would lead to worker losses and
research cuts. The 2.3 percent excise tax, the company said, “would be
very damaging to Boston Scientific, and the medical device industry as
a whole. In a nutshell, it would raise costs and lead to significant
job losses. It does not address the quality of care but the political
scorecard of savings.”
Two years later, Bill Clinton’s doing just peachy. But many medical
device manufacturers are suffering, and many more are preparing for the
worst as the White House gears up to collect on an estimated $20
billion from the lifesaving industry. In typical Obama-transparent
fashion, the Internal Revenue Service quietly released a complex
thicket of medical device tax implementation rules in a Friday document
dump earlier this month. Barring congressional intervention, the
medical device tax will go into full effect in 2013.
Cook Medical, which manufactures products for everything from
endovascular therapy, critical care medicine and general surgery, to
diagnostic and interventional procedures, to bioengineered tissue
replacement and regeneration, gastroenterology and endoscopy
procedures, urology, and obstetrics and gynecology, has called for the
levy’s repeal. Cook Group chairman Stephen Ferguson noted the tax
burden amounted to a whopping 55 percent of its profits.
“For a company like ours, which pays 35 percent of our net earnings in
federal corporate taxes and another 4 to 5 percent in state and local
corporate taxes, the excise tax translates to another payment that will
consume 15 percent more of our earnings,” he estimated. “This creates
tremendous pressure for us to move manufacturing to Europe and other
parts of the world.” According to the trade publication Mass Device,
the company has already canceled plans to build a new factory in the
U.S. because of the Obamacare tax burden.
Stryker, a maker of artificial hips and knees based in Kalamazoo,
Mich., announced in November that it would slash 5 percent of its
global workforce (an estimated 1,000 workers) this coming year to
reduce costs related to Obamacare’s taxes and mandates.
Covidien, a N.Y.-based surgical supplies manufacturer, recently
announced layoffs of 200 American workers and plans to move some of its
plant work to Mexico and Costa Rica, in part because of the coming tax
hit.
Mass.-based Zoll Medical Corp., which makes defibrillators and employs
some 1,800 workers in the U.S. and around the world, says the medical
device tax will cost the company between $5 million and $10 million a
year. Its profit in 2009 was $9.5 million. “Running our company at
close to break even would not be a sustainable position for us,” CEO
Richard Packer said in a public statement, “so we will be forced to
look at alternatives.”
Those “alternatives” include cutting payroll, cutting R and D and
passing on the costs to patients, of course. Industry estimates put the
tax-induced job losses at 43,000. So far, the number-crunchers at 1600
Pennsylvania are mum on the number of potential jobs -- and lives --
destroyed by the medical innovation death tax.
In fact, the Obama administration’s response so far has been a flippant
shrug. Treasury Secretary Tim Geithner, whose only manufacturing claims
to fame are faulty tax returns and near-double-digit unemployment
figures, brushed off concerns this week about the medical device tax.
Obamacare’s expanded access to health care, he argues blithely, will
create more consumers for their products. “On balance, it is a good
package for people in the health care business,” he told Bloomberg News.
Fewer jobs. Fewer entrepreneurs. Fewer medical advances. Only with a
gallon of self-delusion does the Obamacare medical tax medicine amount
to anything other than economic and medical malpractice.
Obama 2012: Winning the future ... by killing it.
Read this and other columns at Townhall
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