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Medical Device Tax


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As was reported last month, the number of knee replacements paid for by Medicare has more than doubled over the last two decades. Well, starting in January of 2013, anyone receiving a knee replacement, a new hip, a simple x-ray, or anything which includes a medical device will likely see their costs go up. Like the other disguised ObamaCare taxes, this new 2.3 percent excise tax on "medical device manufacturing" sales isn't fooling anyone. We know full well that, despite any rhetoric we may hear, the true burden of this tax will fall on all the people who purchase or need new medical devices.

Because they require more health care attention than younger generations, I believe seniors will bear the brunt of this new tax. But some are "in-between" -- like Ninth District resident Jack Morgan, who lost his leg after being struck by a car while helping accident victims on I-81; the cost of replacing his prosthetic leg will also go up. According to Jack, each prosthetic leg costs about $45,000 and lasts about five years. Add another 2.3 percent to the cost, and someone is going to have to pick up the extra $1,000.

On top of raising the costs of medical devices on consumers, this new tax is also wreaking havoc on job creators. The "medical device manufacturers" tax hits revenues, not just profits. Already, the effect of this new tax is costing Americans high-paying jobs. Thanks to a recent Forbes article written by Dr. Scott W. Atlas, Senior Fellow at the Hoover Institution, we know that companies all across the country are being forced to lay off employees and shift jobs overseas.

Boston Scientific says ObamaCare's new taxes will cost more than $100 million a year, so it built a $35 million research center in Ireland instead of the U.S. and announced another $150 million site in China.

Stryker of Michigan announced job cuts of 1,000 workers last November "in advance of the new Medical Device Excise Tax." CEO Curt Hartman reiterated this month that the tax will force companies to move their operations overseas, eliminating American jobs.

Cook Medical of Indiana scrapped plans to open five new plants in the Midwest, while saying "in reality, we're not looking at the U.S. to build factories anymore as long as this tax is in place."
San Diego based NuVasive's CEO Alex Lukianov wrote, "to offset this tax increase, we will be forced to reduce investments in research and development and cut up to 200 planned new jobs next year" and "as a result of the law, for the first time in our history we are being compelled to consider moving manufacturing, clinical trials and investment in new innovation to more business-friendly countries."

CEO Mark Waite of Lighthouse Imaging in Maine stated: "This [tax] will end up making the cost of goods higher, and since most of these medical devices are required, as opposed to being optional, that cost gets passed on to the consumer and the cost of care goes up."

Though it's still awaiting a vote in the Senate, I joined my colleagues in the House and voted to repeal this tax months ago.

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