Industry fights new health reform tax

Expect to hear more on health care reform from an industry that's largely stayed out of the headlines in the ongoing national debate -- medical device makers.

The industry is campaigning hard against a new tax proposed by the influential Senate Finance Committee. Details from that bipartisan committee's work were released last week. While supportive of reform -- which makes sense because more insured people means more people able to afford their devices -- device makers were not happy to find itself named as new revenue source along with health insurers, medical laboratories and pharmaceutical companies in the committee's bill. According to the industry trade association AdvaMed, the bill calls for a $4 billion-a-year tax on the industry over the next 10 years to help pay for reform. AdvaMed officials said Thursday they are also concerned the tax could be permanent since there's no sunset clause.

Minnesota, of course, is home to device industry giants such as Medtronic, as well as many other smaller firms. AdvaMed is led by Stephen Ubl, a Mounds View native. AdvaMed officials said Thursday they will vigorously oppose the tax and raised valid concerns that it will stifle research and development, particularly at smaller companies. AdvaMed released this statement Thursday:

"This tax will raise the cost of care for all patients ... It is a form of double taxation, since a portion of the hundreds of billions in cuts aimed at our customers, including hospitals, nursing homes, and home health care agencies, will be passed on to us. Moreover, the tax will fall most heavily on the small and emerging companies that are the backbone of our industry, often driving development of cutting-edge treatments and cures, and are least able to pay new taxes. Additionally, the fee imposed on clinical labs raises serious concerns in view of other cuts to payments for lab services. There are better ways to reform the system than taxing countless products necessary to treat every patient who walks through the doors of a physician's office, hospital, or nursing home. The device and diagnostics industry supports comparative effectiveness research, value-based purchasing, preventive health, better care coordination and other measures to change the incentives in the health care system to focus on quality and efficiency.

While AdvaMed supports broad-based health care reform and has been working to achieve that important goal, we cannot support a proposal that unfairly singles out the medical technology industry for a tax on innovation on top of the billions in cuts that the industry would already have to absorb within the health care reform proposal.''