Med device firms eye job cuts due to health-care reform tax

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By Julie M. Donnelly

Source: http://www.masshightech.com/stories/2010/05/03/daily36-Med-device-firms-eye-job-cuts-due-to-health-care-reform-tax.html

Local companies plan to make cuts — including job reductions — in response to the upcoming 2.3 percent tax on medical device firms that was part of the national health reform overhaul bill, according to a survey commissioned by the Massachusetts Medical Device Industry Council, the state’s medical device industry association.

The survey, conducted for MassMEDIC by consulting firm PRTM, included almost 100 medical device executives and asked a variety of questions related to policy and regulatory issues.

The survey found that the most common cost-reduction option among industry executives is to decrease operating expenses, including jobs; over 80 percent of respondents said they were either likely, or very likely to take those steps. The next most common way to offset the tax hit included passing the cost on to customers and attempting to reduce the cost of goods sold.

While some device executives have said the tax would have a detrimental effect on research and development spending, stifling innovation, the survey found that at least half of respondents will try to protect research and development spending from cuts.

One of the arguments from Congress and the Obama Administration in favor of taxing the device industry was that the industry will see a surge of new consumers once nearly everyone is covered by health insurance. However, the survey found that while 41 percent of industry executives say business will increase, 42 percent feel there will be no impact.

2 Comments

  1. MicheleLarocque

    This would be sad for our industry. We are one of the few industries that have not been affected by the recent troubles in our economy. This new bill is going to have a stifling affect on innovation, as well as result in job losses. Also those taxes will eventually be passed on to the consumer.
    Our company provides precision machined plastic components to this industry. We have seen an increase in sales for 2010. Maybe this a temporary phenomenon and will go away once the tax is implemented. I know that some organizations are working to get it repealed. I hope that they are successful.

  2. MicheleLarocque

    This would be sad for our industry. We are one of the few industries that have not been affected by the recent troubles in our economy. This new bill is going to have a stifling affect on innovation, as well as result in job losses. Also those taxes will eventually be passed on to the consumer.
    Our company provides precision machined plastic components to this industry. We have seen an increase in sales for 2010. Maybe this a temporary phenomenon and will go away once the tax is implemented. I know that some organizations are working to get it repealed. I hope that they are successful.

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