Orthopedic-device companies are putting up a hard fight against proposals to tax their revenue as a part of health care legislation.
But an industry analyst Wednesday said the businesses stand to gain more than they would lose because the tax revenue would be used to cover uninsured Americans. That would create hundreds of thousands of new consumers for the industry, he said.
“This is a good deal; the industry will make money,” said Robin R. Young, CEO and co-founder of PearlDiver, a Fort Wayne firm that gathers and analyzes data on the life sciences industry. “This tax is going to be used to bring in more patients.”
But one of Warsaw’s orthopedic device makers disputes that analysis.
“I don’t think he could be more wrong,” Biomet Inc. spokesman Bill Kolter said.
Young gave the keynote address at the fourth annual Orthopedic Device and Technology Conference and Exposition, which concludes today at Grand Wayne Center.
The orthopedic device industry, centered heavily in Warsaw, has been up in arms since Sen. Max Baucus, D-Mont., proposed a $4 billion annual fee to help cover the cost of an overhaul aimed at insuring at least some of the millions of Americans without insurance.
Last month, device makers got the Indiana and Minnesota Senate delegations to send a letter asking Baucus to drop the orthopedic fee proposal altogether.
Young said device makers are missing an opportunity to find common ground with the government – creating new recipients for orthopedic devices.
Research indicates that patients who receive those devices are more ambulatory and healthier.
“I don’t understand why the companies are so opposed to this,” Young said in an interview.
Baucus, chairman of the Senate Finance Committee, also proposed $6 billion in annual fees on health insurers and $2.3 billion on pharmaceutical manufacturers.
The fees translate into a tax of roughly 2 percent on the affected industries, Young said.
Biomet disputes whether the proposed fees would amount to a 2 percent tax on the industry.
In his calculations, Young assumed the medical device industry generates $200 billion a year.
But Wanda Moebius, of the industry group AdvaMed, pointed to figures pegging revenue at $164 billion.
Young said he calculated his figures using companies’ SEC filings and that he’d been told by one orthopedic maker they were too conservative.
But the point, he said, is figuring out how many new patients device makers would need before they have more new revenue than the fees cost.
The device makers also dispute that covering the uninsured would mean hundreds of thousands of new customers.
“The majority of hip and knee replacement patients are Medicare patients, for example, so it’s difficult to imagine new patients coming from the uninsured in the numbers you related to me,” Zimmer Inc. spokesman Brad Bishop said in an e-mail.