Innovation is Key to the Future of Health Care
America’s economy continues on the upswing. Manufacturing of domestic goods is helping fuel the rebound from the economic downturn that started in 2008. Those “Made in the U.S.A.” goods include medical devices, part of a world-leading industry of small businesses turning their visions into technology that helps people suffering from diseases or injuries. But this industry has been stymied since 2013 by a portion of Obamacare.
The law imposed an excise tax on manufacturers, producers, and importers of medical devices equal to 2.3 percent of the sales price. The tax applies to a range of devices – wheelchairs, pacemakers, braces, insulin pumps, heart valves, defibrillators, and MRI machines to name a few. These are devices patients and medical professionals depend upon every day.
My colleagues in the House and I have watched innovation be hindered for entrepreneurs interested in bringing their products to market in order to improve and even save lives. The onerous medical device tax applies to revenues as opposed to profits. As a result, medical device manufacturers face owing taxes before their small companies can even turn a profit. It’s estimated that med-tech companies have cut research by $2 billion a year since the tax took effect. More than 29,000 medical technology jobs have been lost. Ultimately, consumers pay more for devices their doctors want them to use to improve their health.
Congress should act to provide relief for patients and small businesses, and recently the House of Representatives took the first step by passing H.R. 184, the Protect Medical Innovation Act. This bipartisan legislation recognizes the medical device tax as harmful to jobs and innovation and permanently repeals the tax.
There are over 8,000 medical device firms in the United States. Repealing the excise tax on med-tech devices will invigorate American innovation and boost manufacturing in the industry. It’s estimated that up to 53,000 net jobs could be created if the tax is repealed. Those are cutting-edge jobs that could grow from the work of scientists and technology leaders in Virginia and the Sixth District, including places like the Virginia Tech Carilion Research Institute (VTCRI) in Roanoke. VTCRI is a hotbed for early-stage work on medical devices and processes that are no longer just the subject of science fiction. These are devices revolutionizing how health care is delivered and increasing how long we live.
It’s clear that our country’s health care system still needs to be improved and we still need to rein in the cost of how that care is delivered. However, creating a health care system that leads the way relies on businesses and entrepreneurs improving the quality and delivery of patient care. Dynamic, state-of-the art medical device manufacturers in the United States stand ready to make life-improving and life-saving products. Repealing the destructive excise tax on innovation is a step towards more jobs, devices coming to market more quickly, and more opportunities to share such technologies with the world.