There has been much debate over the medical excise tax imposed on medical supplies and equipment by ObamaCare. As of 1/1/2013 this 2.3% tax has been applied to all medical devices sold in the United States. This "innovation tax" as some call it does not care if the company has a positive income or if they have red numbers on their profit books, either way they will have to pay. With this in play individual healthcare will be a lot more costly. The debate surfaced as these companies and the general public believe it is unfair to for them be punished by taxation when what they do is help treat patients.
It is obvious that Obamacare
needs to generate revenue however using the medical excise tax as an anchor for this funding is unfair. The mergers and acquisitions in the medical device industry will also be affected, although not on purpose. Smaller companies are fast to innovate but do not have the means to commercialize their products. These small companies are merged into or bought by major manufacturers that are able to distribute their products into a wider and well known market. If these small companies are forced to pay the medical excise tax on their new products, their net worth will decrease.
Besides the innovation and competitiveness among medical supplies companies will be stalled as a result , another impact zone due to this medical excise tax will be in the job sector. Estimates show that 64,000 American Jobs could be on the line as companies may have to move some jobs to other branches outside of the US to balance the profit loss that they might incur.
A main discussion point in regards to the effects of this medical excise tax
is how it may affect everyday Americans. It is true that it will not vary the sale price on a specific product, however it will most likely have manufacturers bring up their sales prices to balance out the tax impact. Also hospitals, doctor's clinics and others may have to put an increase on their admission costs and on the treatment they give patients. This is due to the fact that as payers in the healthcare system they will also be hit by the medical excise tax.
If the tax plan was planned out better and with more thought towards what's best for the people it would have made a lot more sense to tax medical supplies
such as bedpans, tongue depressor, gauze or bed sheets. These items are constantly being replaced and will always be needed in large amounts. However, taxing surgical tools, pacemakers and more expensive devices does not make sense at all. Of course, it does to the government that's getting 29 billion dollars in revenue for the next decade.
Medical supplies companies are already submitted to rigid and expensive FDA regulations to make sure that their products are efficient and safe. The addition of this tax on devices that are needed in healthcare to save lives will make it harder for them to stay competitive and this will also result in delays of product releases.