Congressman Luke Messer

Representing the 6th District of Indiana

Repealing medical device tax will save Hoosier jobs

Aug 15, 2013

Repealing medical device tax will save Hoosier jobs

Indiana has been hard hit by our nation’s economic downturn.  The President’s health care law is making matters worse.

One prime example is ObamaCare’s $30 billion excise tax on medical device manufacturers.  The tax is levied on gross revenues, not profits, which means companies will be forced to pay the tax whether they make a profit or not.  I think that is un-American.  But, this approach is particularly unfair in an industry where companies invest millions navigating the hyper-regulatory federal approval process simply to bring a new product to market.  The inevitable result will be higher health care prices for consumers, less investment in new designs and lost jobs. 

There are over 8,000 medical device manufacturers in the United States, more than 300 of which are based in Indiana.  These companies such as Cook Medical (Bloomington), Hill-Rom (Batesville), Zimmer (Warsaw), Boston Scientific (Spencer) and Roche (Indianapolis) employ more than 20,000 Hoosiers and support thousands of other jobs, contributing over $10 billion to the State’s economy.  These communities depend on the jobs and the direct and indirect revenue generated by the manufacturers of these products.  

This wrongheaded tax is estimated to cost Indiana medical device manufacturers more than $77 million annually.  As a result, businesses around the State are being forced to make difficult business decisions to offset the cost.  Some have diverted capital away from important research, development and manufacturing activities.  Others have delayed planned expansions.  Chris Cerone, President of the Indiana Medical Device Manufacturers Council, has said that the tax “threatens the vibrancy of a critical component of Indiana’s economy and the global competitiveness of an important American-led industry.” 

Worse yet, the tax will imperial medical innovation that has saved and improved the lives of millions of Americans.  Medical device advances in areas like joint replacement and vascular surgery have spared countless people from insufferable pain.   These advances have also saved the health care system billions of dollars by providing safe and effective alternatives to more costly and invasive procedures.  Our country needs these trends to continue.

That’s why I cosponsored a bill in the House to repeal the medical device tax.  This bipartisan measure, the Protect Medical Innovation Act, has been cosponsored by at least two hundred and sixty House members.  As President of the Republican Freshman class, I also recently initiated a letter that was signed by more than thirty of my new Republican colleagues urging passage of this bill.  

It is just commonsense.  Enactment of this bill will protect medical innovation, preserve patient access to care and save American jobs.  We should not put American manufacturers at a competitive disadvantage and put patient care at risk simply to pay for the President’s broken health care law.