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Two years ago this month, as public debate over Obamacare raged, former President Bill Clinton rushed to the hospital because of a heart condition. He immediately underwent a procedure to place two stents in one of his coronary arteries. It was a timely reminder about the dangers of stifling private-sector medical innovation. No one listened.
Stents don’t grow on trees. They were not created, developed, marketed or sold by government bureaucrats and lawmakers. One of the nation’s top stent manufacturers, Boston Scientific, warned at the time that Obamacare’s punitive medical device tax would lead to worker losses and research cuts. The 2.3 percent excise tax, the company said, “would be very damaging to Boston Scientific, and the medical device industry as a whole. In a nutshell, it would raise costs and lead to significant job losses. It does not address the quality of care but the political scorecard of savings.”
Two years later, Bill Clinton’s doing just peachy. But many medical device manufacturers are suffering, and many more are preparing for the worst as the White House gears up to collect on an estimated $20 billion from the lifesaving industry. In typical Obama-transparent fashion, the Internal Revenue Service quietly released a complex thicket of medical device tax implementation rules in a Friday document dump earlier this month. Barring congressional intervention, the medical device tax will go into full effect in 2013.
Cook Medical, which manufactures products for everything from endovascular therapy, critical care medicine and general surgery, to diagnostic and interventional procedures, to bioengineered tissue replacement and regeneration, gastroenterology and endoscopy procedures, urology, and obstetrics and gynecology, has called for the levy’s repeal. Cook Group chairman Stephen Ferguson noted the tax burden amounted to a whopping 55 percent of its profits.
“For a company like ours, which pays 35 percent of our net earnings in federal corporate taxes and another 4 to 5 percent in state and local corporate taxes, the excise tax translates to another payment that will consume 15 percent more of our earnings,” he estimated.
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