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November 20, 2009

Our view: New tax threatens medical device industry

Much of the discussion regarding the shape of health care reform has focused on cost (the Congressional Budget Office estimates the price of the Senate version unveiled this week at $848 billion), accessibility, abortion and those so-called "death panels."

But there's a little-noticed provision in the House version of the bill passed recently that could spell trouble for the medical device industry, which has a significant presence here on the North Shore. The bill includes a new tax on sales of this equipment.

Thomas Sommer, president of the Massachusetts Medical Device Industry Council, wrote Sen. John Kerry last Sept. 11 stating that "the proposed tax would have a significant and unfair impact on our companies, our employees in Massachusetts, and the research and development we conduct in our state."

He added, "As you know, Massachusetts is home to the second-largest concentration of medical device development and manufacturing in the nation. The ... cluster includes 225 companies and 50,000 employees. (Its) impact on the state's economy totals $7.2 billion."

A report from MassDevice, a medical device industry newsletter, reported medical device manufacturers may wind up paying 1.5 percent to 2 percent on their $120 billion in annual U.S. sales, or up to $2 billion.

As has been noted in this space before, there's a price to be paid for universal access to quality health care. The question is: Who will pay it?

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