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Medical Device Tax Led to Thousands of Job Cuts

By atesmeh | January 30, 2015

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A recent survey conducted by a medical technology trade group blames a tax on medical devices for about 18,500 industry job cuts in the last two years.

The Advanced Medical Technology Association said the tax – which was enacted as part of the Affordable Care Act to generate revenue for the law – resulted in 4,500 job reductions in 2014. AdvaMed’s previous survey showed 14,000 job cuts by medical technology companies in 2013, the first year the tax was collected.

Read: 3D-Printed Heart Helps Treat Child’s Rare Condition

Medical device makers also predicted the tax would halt the creation of more than 20,000 new jobs over the next five years. In total, two-third of survey respondents said they have slowed or stopped U.S. hiring due to the tax.

“In the two years since the implementation of the medical device tax, our member companies have experienced significant job losses and damaging reductions in R&D,” said AdvaMed President Stephen Ubl. “The findings of this report, spanning two years of the tax’s effects, reaffirm the need for swift action to repeal this harmful tax on innovation.”

In addition, more than half of the companies surveyed had reduced research and development due to the tax, while a larger margin said they would consider further reductions if the tax is not repealed.

Strong majorities of the responding companies said they would restore both hiring plans and research funding should the tax come to an end.

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The survey was distributed to each member of the trade group; AdvaMed said the 55 companies who responded electronically between Nov. 20 and Dec. 12 accounted for 20 percent of its members and nearly half of domestic industry revenues.

The medical device tax, although a relatively small portion of the 2010 Obamacare law, has become one its most contentious elements in subsequent years. It levies a 2.3 percent sales tax on a vast array of products, ranging from those as simple as surgical gloves to as complicated as defibrillators.

It has also attracted a swarm of lobbying spending by manufacturers looking to repeal the law, and bipartisan efforts to eliminate it in the new session of Congress.

The industry study, however, is at odds with reports from other sources. The Congressional Research Service attributed a maximum of 1,200 job losses to the tax, while consulting firm Emergo reported less than 20 percent of industry executives cut jobs or research.


Filed Under: Industrial automation

 

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