Medical Device Excise Tax
What is the medical device tax?
- As part of health care reform, Congress passed a 2.3% excise tax on most types of medical devices which took effect January 1, 2013. The excise tax is based on revenue, not profit, and will ultimately harm small-to-midsize innovative medical device companies the most.
- The medical device tax is estimated to cost $30 Billion over 10 years.
- Initial studies of the tax calculated that over 40,000 well-paying jobs in the medical device industry will be LOST due to the implementation of the tax.
- A recent AdvaMed survey documents 33,000 direct job losses in the industry as a result of the tax.
- Many companies will owe MORE in taxes than profits.
- Current repeal legislation has broad-based bipartisan support in both houses of Congress.
- The excise tax will adversely impact innovation and R&D investment for all medical technology companies, and disproportionately impact small-to-midsize companies, which drive innovation, scientific discovery and job growth.
What is FMMC’s position?
The FMMC has opposed the medical device tax from the beginning, and continues to work for a full repeal of this bad policy.
The negative impacts of the 2.3% medical device excise tax, passed as part of the Affordable Care Act (ACA), are no longer theoretical – they are real. Recent industry surveys published more than a year after the tax went into effect on January 1, 2013, reveal significant job losses and, perhaps more ominously, deep cuts in R&D investment and deferred or cancelled capital investments in order to pay the tax.
The medical device tax is particularly problematic for Florida – a state that is rich in medical technology manufacturers. Florida is home to one of our nation’s largest medical device economies – encompassing 662 device manufacturers employing nearly 21,000 Floridians, paying an average annual wage of more than $60,000. Florida is one of the top five med-tech job producers in the country; and the vast majority of Florida medical device manufacturers (80%+) are small, entrepreneurial firms, employing fewer than 25 people. These are the companies that have been driving Florida’s job creation and innovation in patient care in the medical technology sector.
This bad tax is adversely impacting innovation, R&D investment and job expansion in our state, and is disproportionately impacting small-to-midsize companies – the lifeblood of Florida’s medical device industry.
Proponents of the medical device tax reflexively suggest that this new levy will be more than offset by increased demand for medical devices as result of “millions” of new insured individuals promised by the ACA. But there is simply no evidence suggesting a device industry "windfall" from healthcare reform. Unlike other industries that may benefit from expanded coverage, the majority of device-intensive medical procedures are performed on patients that are older and already have private insurance or Medicare coverage. Where states have dramatically extended health coverage, such as in Massachusetts where they added 400,000 new covered lives, manufacturers did not experience a “windfall” in demand for their medical devices.
The FMMC continues to work with our elected officials, members and partner organizations on bipartisan proposals to repeal or delay the medical device tax to ensure that patient care, innovation and job creation continue to thrive.
How can I help?
Contact your U.S. Representative and Senator and tell them to repeal the onerous medical device excise tax. And be sure to sign the repeal petition here.