A federal tax on medical devices went into effect at the beginning of the year. As part of President Obama's healthcare bill signed into law four years ago, a 2.3 percent tax will be assessed on companies that produce anything from wheelchairs to pacemakers.
This is harmful to the medical industry and places more hurdles in the way of economic growth. The United States accounts for 40 percent of the global medical technology market, exporting $5.4 billion more than it imports.
That level of production not only benefits the U.S. economy, but makes a positive difference around the world. The federal government should not try to punish these companies, but rather encourage opportunities for growth. A medical device tax achieves exactly the opposite.
The Ohio House of Representatives recently passed a resolution that urges President Obama and Congress to repeal the tax on medical devices. All 60 Republicans, as well as 16 Democrats, voted in favor of the resolution.
Medical device and equipment manufacturers in Ohio employ more than 22,000 people. Placing an added tax burden on top of what these companies already pay can hinder innovation and lead to fewer jobs.
In April, Senator Rob Portman toured the Zimmer Surgical facility in Dover and discussed the harmfulness of the medical device tax. "This is a tax that is anti-job and anti-growth," he said, expressing concern that it moves jobs overseas.
Innovative start-up companies will be especially harmed because the tax is imposed on sales, rather than profits. In other words, start-up companies do not typically make as high of profits as do more established companies, therefore they would not be hit as hard. However, because the tax is assessed every time the cash register rings, a start-up that is trying to get off the ground with an innovative product or idea will have more difficulty succeeding.
Worse yet is the impact this may have on patients who are seeking life-saving medical devices. Competition in the marketplace drives down prices, but as jobs and businesses are wiped out by this tax, not only are there fewer ideas, but also fewer providers. That causes prices to climb.
Ohio has limited influence on federal issues, but hopefully with increased pressure from other states and citizens, the tax will be repealed.
Rep. Landis may be reached by calling 614-466-8035, e-mailingRep98@ohiohouse.gov or writing to State Representative Al Landis, 77 S. High St., Columbus, OH 43215.