Minnesota Medical Device Makers Let Down as Repeal of Medical Device Tax Falters

Published On: 15th November 2013

From the internet

Medical device manufacturing is a major business in Minnesota and it is a business that strongly opposes the medical device tax.

Despite President Obama saying he would not repeal the medical device tax, a behind-the scenes effort took place to repeal this tax that Minnesota medical device makers have opposed.

Repealing the medical device tax was part of the negotiations to end the government shut down. The White House expressed it was open to the repeal effort, which was a bargaining chip in the debt limit crisis. However, it was not part of a tentative agreement between Senate Republics and Democrats that would fund the government for the next three months.

When Congress was formulating a deal to vote on, the deal that included a repeal of the medical device tax was floated and then dropped before the vote. Had the plan received a vote from the House and the Senate, it would have delayed the medical device tax by two years.

Aside from income verification, the Senate deal that the House and the Senate voted on did not make any major concessions to the Affordable Care Act.

It is expected that a window will be opened for further negotiations when a long-term budget deal is in the works. A lot of momentum has been gained for the repeal of the tax. Even if the tax is not repealed in a final bargain, there were a total of 79 senators that voted for the repeal earlier in 2013.

One device industry trade association, AdvaMed, has been looking for a way to repeal the tax since it was put into place three years ago to help pay for the health care reform happening in the nation. The tax actually wasn’t collected until 2013 and AdvaMed already estimates that its members have already paid approximately $2 billion since the tax went into effect in January.

A study sponsored by the medical device industry found that the tax could cost 43,000 U.S. jobs. The Bloomberg Government Report has disputed this finding.

Medtronic Inc, based out of Fridley, saw $16.6 billion in sales in their last fiscal year. They projected that the tax in fiscal 2014 will cost them around $120 million. For them, that is less than 1/10 of one percent of their revenue. For others, the tax takes a bigger bite out of their revenue stream. For facilities like St. Jude Medical, $50 million to $60 million of their revenues must go to the tax rather than important initiatives, such as research and development of new products.

Medtronic has not specified whether or not the tax would affect their hiring efforts or whether or not business performance would be affected. The company did state that the medical device tax is a factor when considering their business pressures and they account for it in their budget and investment plans.

Proponents of the tax say that talks have been about how to repeal the tax and not how to pay for the Affordable care Act.

Source: http://www.startribune.com/business/227933191.html