R&Q's Blog

As the government shutdown dragged onward, nobody was watching the outcomes more than medical device manufacturers. For device manufacturers – there was and still is a lot at stake. And make no mistake – the medical device tax is part of the hot debate in Washington right now. Part of the 2010 Affordable Care Act included a 2.3% tax on medical devices. The tax has caught a lot of attention from both Republicans and Democrats – part of the most recent House GOP proposal to end the partial government shutdown actually includes a deal to suspend this medical device tax for two years. The revenue from this tax is to be utilized to help fund the Affordable Care Act.
The tax has not been fully supported by either party – back in 2010, 30 Democrats joined Republicans and opposed the medical device tax. However, there are very worthy arguments against the device tax & defending the device tax, which I will not explore in this article but are referenced on Newsreplubic.com. (Source: News Republic “Is Obamacare’s Medical-Device Tax Up for Negotiation?”)
Why hasn’t the tax been nixed in general you might ask? Mainly, we haven’t found an alternative source of tax revenue that would replace what the medical device tax would provide, as it raises approximately $30 billion over 10 years and is a large part of the funding for the Affordable Care Act.
In most recent news (Late Tuesday, 10/15), the tax has been cut from the latest House Republican offer; meaning the two year delay might be scrapped altogether. However – it has been in and out of several offers from both Republicans and Democrats for the last several months. (Source: The Washington Post “GOP leaders nix medical device tax delay”). As of this most recent news – it is not looking good for device manufacturers as far as delaying the tax; however, as we’ve already found out – a lot can change in a short amount of time. -SJG

In the second of the two part series, we'll review support of the 2.3% tax of the medical device industry to go into effect on January 1, 2013. Earlier this week, I outlined why the industry sees this tax as an enormous burden and described actions already being taken to off-set the cost of the tax (the overwhelming sentiment toward the tax). In all fairness, we need to consider why the tax was implemented, and what greater good it is serving.

Thanks to Sherri's earlier post, we've begun to explore the landscape of the medical devices industry in reaction to the 2.3% tax on revenue for medical device companies as a result of the Affordable Care Act. The tax is being implemented in part to fund the estimated 30 million additional Americans that will be provided with health coverage.