As the Patient Protection and Affordable Care Act celebrates its one-year anniversary, a controversial medical devices tax included in the law hasn’t been forgotten by those most likely to be affected by it.
The Medical Device Manufacturers Association, a Washington, D.C.-based trade organization, opposes the tax and supports repealing it. The group has reiterated its position as the Internal Revenue Service prepares to implement the new tax.
The PPACA imposes an excise tax of 2.3 percent on the sale of taxable medical devices by the manufacturer, producer or importer of devices sold after Dec. 31, 2012. It's unclear at this point as to which devices are eligible to be taxed.
“MDMA and our members remain committed to repealing the medical device tax,” said Brendan Benner, the association’s vice president of public affairs. “Our members tell us that if this tax is implemented as scheduled, there are three ways they would address its impact: Reduce or halt job creation, cut back on research and development, or move manufacturing jobs overseas. Any one of these options would be detrimental for patient care and innovation. There are bipartisan efforts to repeal this 'innovation' tax, and we continue to work with elected officials to prevent it from taking effect in 2013.”
In its letter to the IRS, the MDMA recommended that if the tax is not repealed, the IRS should at least delay by a year its implementation to make sure a “meaningful, comprehensive and workable guidance” will develop.
Organizations outside the medical devices industry but tied to it – hospitals and purchasing groups, for instance – are concerned that the medical devices industry will pass the tax on to them and to consumers.
In a letter to the IRS, the Federation of American Hospitals, American Hospital Association, Catholic Health Association of the United States and Health Industry Group Purchasing Association said they are concerned that “medical device companies will eventually pass through this entire tax to their customers. This strategy would allow device manufacturers to sidestep their responsibilities, while increasing the financial commitment of other stakeholders, including hospitals. From a systemic perspective, this would actually increase (not decrease) the cost of healthcare and would likely negatively impact patients and employers through higher insurance premiums and cost sharing.”
The organizations also said they fear medical device companies will be able to “treat the tax as a deduction to their income for federal corporate tax purposes,” thereby bettering their financial position to the detriment of others.