The Impact Of The Medical Device Excise Tax

By November 29, 2012Uncategorized

The New Medical Device Excise Tax Scheduled To Begin In 2013

Medical supply giant Stryker Corporation is the latest company to announce job cuts in anticipation of predictable costs attributable to ObamaCare. Stryker employs more than 21,000 people worldwide, in more than 100 countries and has 29 Research and Development operations around the world.

The company has announced that it will eliminate more than 1,150 jobs, in order to cope with the impact of a “medical device excise tax“ contained in the Obamacare legislation.  That tax imposes a 2.3 percent levy on medical device manufacturers and suppliers, which critics say will force prices of pacemakers, prosthetics, stents and a wide variety of other medical devices upwards. Medical supply companies are compelled to pay the medical device excise tax whether or not those companies they have a profit or loss for the year. The tax is estimated to cost the medical device industry $20 billion which, of course, will ultimately be obtained from the purchasers of those medical devices.  Congressional Republicans attempted to repeal the tax by drafting a bill called the Protect Medical Innovation Act.  However, Senate Democrats have stymied that tactic.

A Stryker spokesperson told that targeted reductions and other restructuring activities are being initiated to (a) provide efficiencies and realign resources in advance of the new Medical Device Excise Tax scheduled to begin in 2013 and (b) allow for continued investment in strategic areas and drive growth despite the ongoing challenging economic environment and market slowdown in elective procedures. The same spokesperson also stated that the reductions and restructuring activities are expected to be substantially complete by the end of 2012.

Executives for Stryker have placed the blame squarely on the coming tax ever since it gained more steam in Washington. “Here we are, one of the greatest industries in the country, and we’re staring down on Jan. 1, 2013 and the addition of a 2.3 percent excise tax, while meanwhile on the other side all the discussion in Washington is about creating jobs,” Stryker President and CEO Stephen McMillian said during a national conference of medical device manufacturers in Washington, D.C. last September.

Positions within the company were eliminated altogether after the announcement and have since contracted out many of their current roster of employees to keep costs down, an employee with Stryker, who spoke to under the condition of anonymity, said.

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Source: – Medical Supply Company Stryker

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