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Wednesday, Oct 01, 2014
Editorials

Dump medical device tax

Published:

The Obama administration's indifference to marketplace realities is apparent in its refusal to junk a medical device tax that threatens health care innovation and the economy.

The 2.3 percent excise tax on pacemakers, CAT scans, braces and other medical devices went into effect Jan. 1.

It was adopted as part of the Patient Protection and Affordable Health Care act.

But even liberal members of Congress soon recognized the pitfalls of this tax, which is collected on gross sales, not profits.

Since industry profits run about 3.5 to 4 percent, the tax will threaten device manufacturers and discourage investors from backing medical innovations.

This spring, the Senate voted 79-20 to repeal the tax. It was passed as an amendment to the Democratic budget that had no prayer of passing the House, though a majority of representatives have endorsed the tax's repeal.

Despite that show of opposition, the Obama administration remains committed to the tax, which is expected to raise $30 billion over 10 years to help fund its health care expansion.

Now Sens. Amy Klobuchar and Al Franken of Minnesota are urging Congress to include the tax repeal as part of comprehensive tax reform.

Minnesota has a thriving medical device industry, but not as large as Florida, which is second in the nation in medical device companies, with more than 538 device manufacturers. There are hundreds more component producers.

This is a key growth industry for Florida, employing more than 20,000 Floridians who make an average salary of $63,000.

But the Obama tax puts all that at risk - as well as the welfare of patients who benefit from advancements in the medical device industry.

The administration recognized its mandate that businesses provide employees health insurance or pay a fine was not ready for implementation and delayed the requirement.

The administration also should see this damaging tax undermines the health care it purportedly wants to provide American.

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