Medical Taxes Affect R&D
It is easy to center on the more visible elements of medicine—smiling nurses reassuringly patting hands and soothing fevered brows, the determined surgeon who removes the appendix or stitches the edges of a wound together so deftly that only a faint, fine line remains, often lost in a smile. Behind those images, however, lies an entire industry devoted to easing the suffering of the sick and advancing devices and instruments that can help in conquering some of the most dreaded afflictions that confront the human race. Under the Patient Protection and Affordable Care Act (PPACA), that industry faces an uncertain future.
Starting in 2013, medical device manufacturers will begin paying a 2.3 percent excise tax on the devices they produce. The tax is expected to cost device manufacturers $20 billion annually unless Congress can overturn that portion of the law. An industry executive noted that if the tax stays in force, up to 43,000 American jobs could be lost. The medical device tax could have damaging effects on economic competitiveness, jobs and research and development (R&D). R&D dollars drive innovation and innovation lowers costs, so the adverse effect of the tax on investment will keep expensive medical devices from becoming affordable and widely available in the future.
Taxes on companies often end up hitting consumers as higher prices, and the device tax is no different. Whatever costs cannot be passed along to patients will be absorbed by the medical device companies, which will lead businesses to cut jobs as they tread water to stay afloat. Meanwhile, the authors of the tax created an exemption for common medical products such as band aids, eyeglasses, and hearing aids; high-dollar items like pacemakers and prosthetics and many routine products, like braces, are not exempt, however.
Research, development and manufacturing constitute a large part of the economic picture in Queens. Immediate figures are not available, but a glance at, say, the Queens Chamber of Commerce Web site, will quickly reveal that this element of modern medical practice puts a sizable amount in the borough’s coffers, public and private. We hope that this part of the PPACA will be quickly rectified so that all the benefits to be gained from this legislation will be enjoyed by all Americans, especially our fellow residents. The health of our neighbors and ourselves, now and in the future, is at stake.