Health care bill taxes medical device makers

Different sectors of the health care industry are being asked to pitch in to fund the health care bill signed into law by President Obama yesterday. This includes one industry that has a strong presence in the region but had previously received little attention in the health care debate.

Different sectors of the health care industry are being asked to pitch in to fund the health care bill signed into law by President Obama yesterday. This includes one industry that has a strong presence in the region but had previously received little attention in the health care debate.
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There are a number of device manufacturers in southeast Pennsylvania, producing everything from x-ray machines to latex gloves. With an estimated 30 million more people covered by health insurance in coming years, these companies are expected to get more business. The health care bill includes a 2.3 percent tax on all of their product sales.

Mark Leahey, the president of the Medical Device Manufacturers Association, says the tax is unfair because some devices are used regardless of insurance status. He gives the example of defibrillators used for heart attacks.

Leahey: The incidence of sudden cardiac arrest is not going to increase or decrease as a result of health care reform, so again there are certain products that are’nt going to see any uptick regardless of the bill and yet these products will now be faced with a significant tax.

David Filmore is the senior editor of the medical device trade publication The Gray Sheet.

Filmore: There’s a sense at least for a lot of the cardiovascular implantable types of stuff, stents and things like that, that maybe it doesn’t equal out because a lot of those are used predominantly in Medicare patients, which are obviously already covered, and also in emergency situations which are typically done with or without insurance.

On the other hand, diagnostic tests, which also fall under the medical device category, may see a boom in business. Under the bill, people will be able to get free screenings for certain types of cancers.

Congressman Jim Gerlach, a Republican from Pennsylvania, voted against the health care bill, and says he’s concerned about the impact to local device makers.

Gerlach: They employ a lot of our people in southeastern Pennsylvania, thousands of people. And they’re going to have to start paying a tax regardless if they’re a profitable company or not.

Pharmaceuticals, hospitals, and insurance companies are also contributing either taxes or reduced government payments to help pay for the new health care regulations.