ObamaCare: Job Destroyer and Innovation Killer

While President Obama was lecturing the Supreme Court on constitutional law, his drones in the federal bureaucracy were sharpening rules aimed at collecting billions of dollars in new taxes on lifesaving medical devices used by millions of Americans.

In what appears to be a deliberate attempt to skirt public scrutiny, the Internal Revenue Service quietly issued cumbersome procedures for implementing the taxes, estimated to haul in $20 billion to help pay for Obama Care.  The tariffs are slated to go into effect next year.

As a result, taxes will be slapped on everything from stents to artificial hips and knees to defibrillators. Although the assessment will be levied on the medical device industry, ultimately consumers will end up paying the tab through higher medical and insurance costs.

Ahead of the tax implementation, medical companies are laying off employees, slicing investment in research and development, and reigning in plans for new manufacturing facilities.  The result will be fewer jobs, less innovation and more government paperwork, according to industry sources.

"In a nutshell, it (the tax) would raise costs and lead to significant job losses," reported Boston Scientific, one of the nation's premier medical device manufacturers.  "It does not address the quality of care but the political scoreboard of savings."

The tax, a 2.3 percent levy, may look small, but when coupled with other fees paid by the medical device industry, the impact will be huge on a business segment with wafer-thin profit margins. 

"This creates tremendous pressure for us to move manufacturing to Europe and other parts of the world," warned Stephen Ferguson, chairman of Cook Medical, a large manufacturer of a whole range of diagnostic and surgical devices.

Stryker, a Kalamazoo, Michigan-based company which manufactures artificial hips and knees, is one of the firms that already has announced plans to slash its global workforce by 1,000.  Other companies, like Massachusetts' Zoll Medical Corporation, envision a bleak future for the industry.

"Running our company close to break even would not be a sustainable position for us," Zoll said in a statement.  "So we will be forced to look at alternatives."  Those alternatives include outsourcing manufacturing to other countries.

In addition, the tax will undermine the incentive for entrepreneurs to create new lifesaving devices.  Their start-up expenses are bound to be higher to reflect the added cost of doing business, thus discouraging many from manufacturing and marketing their inventions.  

None of the gloom and doom talk has fazed the tax-happy Obama Administration.  The president's Treasury Secretary Tim Geithner shooed industry concerns like a cow swatting flies with its tail.  He argued the taxes and the law's expanded coverage will create more demand for the devices.

Really?  What planet does Geithner live on?  Higher prices for devices will stifle demand from hospitals and medical professionals.  Obama Care's onerous provisions also will make certain that happens because health care coverage for procedures using the devices will be reduced.

That leaves the medical device industry in a classic Catch-22 situation.  Their costs will rise, but government provided health care will pay less for procedures involving the devices.

If you are the beneficiary of a medical device, let your voice be heard.  Write and call your congressman or congresswoman.  Even if you don't currently have a pacemaker or other medical appliance, when you need one, you better pray it will be available to save your life.

The best outcome is that the president's tongue-lashing will harden the Supreme Court's resolve to do the right thing and throw Obama Care in the trash bin where it belongs.