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Medical Companies: Taxes In Healthcare Bill Will Kill
Jobs, Businesses
Knock on effect will mean more costs for the
American people
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 One
of the key selling points of the Obamacare health bill for the
Democratic leadership was that it would provide tax breaks and
credits for businesses to cover the cost of insurance for their
employees. The Washington elite were somewhat less vocal, however,
about huge tax increases that some companies now say may wipe
them out altogether.
Medical device manufacturers have warned that a tax under the
new health care overhaul on companies producing medical instruments
and equipment will mean that jobs and manufacturing may have
to be shifted out of the U.S. in order to secure already razor
thin profits. Beyond passing on costs to hospitals, surgeries, ambulance companies and the
like, the options for the medical device industry are to cut
research and development and then shift their production bases
abroad.
Ernie Whiton, chief financial officer of Zoll Medical Corp.,
tells the Boston
Herald “This bill is a jobs killer”.
“We could be forced to (move) manufacturing overseas
if we can’t pass along these costs to our customers,”
said Whiton.
Zoll, the leading manufacturer of heart defibrillators, employs
around 650 people at its manufacturing facility in Massachusetts,
and a further 1000 across the country.
"We believe that the tax will cost us somewhere between
$5 million and $10 million a year," Richard Packer, Zoll's
chairman and chief executive officer told The
Washington Examiner this week. "Our profit
in 2009 was $9.5 million."
Under the Obamacare bill, signed into law on Tuesday, the government
will extract a fee of $2.2 billion annually from medical device
makers, equating to a sales tax of 2.9% beginning almost immediately.
This would result in a $20 billion hit for the industry over
the next decade.
Under the companion “Reconciliation” bill, currently
in the Senate, the tax is set at 2.3%, and would take effect
on January 1st, 2013.
We can't run this company at a break-even or a negative rate,"
Zoll's Packer adds, "so we will be forced to look at alternatives."
As part of the life-sciences sector, the medical device industry
has actually continued to create jobs despite the economic crisis
- this is how those healthy companies are now being rewarded,
with possible extinction.
“They’re beating up on the guys doing the best
to create jobs,” Tom Taylor, chairman of the Massachusetts
Medical Devices Industry Council and founder of Roush Life Sciences
told the Examiner.
The bill is expected to clear both chambers today. Once it
does so, numerous
tax increases will be put into law by Obama.
The government will extract a fee of $2.3 billion annually
from the pharmaceutical industry, a cost that will inevitably
also be taken out of research and development, as well as being
passed on to the consumer.
The government will also extract a fee of $6.7 billion annually
from insurance companies - 'good, they are the ones to blame'
many will cry - maybe they will think again when premiums increase
and the cost is yet again passed on to the consumer.
The bill also legislates for a $50,000 tax on hospital organizations,
which fail to meet described quality requirements - perhaps
because they have to spend more of their funds on the increased
cost of medical devices?
Another business tax contained within the reform bill is a
10% levy on indoor tanning. The International
Smart Tan Network says that the tax "could
lead to more than 1,000 tanning business closures in 2010".
A similar 5% tax will be applied to elective cosmetic medical
procedures.
Companies that provide pension plans that include prescription
drug benefits for retirees and their spouses, have also warned
they face being hit hard by taxes on federal subsidies they
receive as part of the process.
Heavy machinery manufacturers Caterpillar
and Deere have been most vocal about this, announcing
that they will immediately face $100 million and $150 million
charges respectively as a direct result of the health care overhaul.
All businesses, of course, face hefty fines of $750 (up to
$3000 under the Reconciliation Act) should they fail to provide
employees with coverage.
In addition, under the Reconciliation bill, firms refusing
to pay health insurance, but not meeting required exclusions,
face an 8% tax on wages.
The federal government will also impose a 40% tax on the value
of employer-sponsored health coverage which exceeds certain
"high cost" thresholds.
The
Chamber of Commerce tells Fox Business that "the
new law will hurt job creation and increase taxes on small businesses,
and do little to restrain [health care] costs."
The idea that the Obamacare bill is business friendly is another
myth that is washed away like sandcastles on a beach within
five minutes of reading around the peripheries of the legislation.
Just as the idea that a trillion dollar health bill could in
any way cut the national deficit, the notion that American businesses
will be in any way shape or form better off as a result of the
mandates placed on them under this so called "reform"
is patently absurd.
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