Medical device and MedTech insights, news, tips and more

At A Glance: The Senate Finance Committee’s healthcare reform bill is a topic of much concern for Medical Device professionals because its enactment could cut jobs in our industry. The Senate’s plan puts additional financial pressure on MD companies by way of an annual aggregate fee on the MD industry. But many experts believe this financial burden could cause more people to lose their jobs. On the other hand, the House of Representatives is proposing a compromised version of the Senate’s Bill, and it even appears to be more favorable; rather than an aggregate fee, a 2.5% point-of-sale tax would be applied. Connections, compromises, and corporate taxation aside, whether or not the House will have any impact on the Senate remains to be seen.

The Senate Finance Committee’s healthcare reform bill is a topic of much concern for Medical Device professionals because its enactment could cut jobs in our industry. The Senate’s plan puts additional financial pressure on Medical Device companies by way of an annual aggregate fee on the medical device industry of $4 billion. Many experts believe this financial burden could cause more people to lose their jobs. The reasoning behind this plan is to generate $40 billion over the course of 10 years for healthcare reform. John Engelhardt of Ortho Knowledge wrote an informative article that breaks down the numbers (find Engelhardt’s report here: Orthoworld Article). How do we feel about all this? As active Recruiters within the Medical Device industry, our business’s livelihood depends on placing people for the very jobs that could be lost per the pending reform. Needless to say, we are all a little worried, even in light of our previous reports indicating the incredible uptick in hiring we’ve experienced recently.

In spite of our worries, and with a little digging, to our surprise we (of course we did) found an interesting article from ModernHealthcare.com (you can view it here: Modern Healthcare Article) reporting that the House of Representatives is proposing a compromised version of the Senate’s bill, and it even appears to be much less taxing (no pun intended). According to the article, under the House’s bill, rather than an aggregate fee, a 2.5% point-of-sale tax would be applied. The House is aiming to bring in $27 billion from the Medical Device industry over the course of 7 years beginning in 2013.

Under the House’s plan, medical manufacturers would be able to reduce the total fee they incur by deducting the tax from annual corporate tax filings. Differing, companies wouldn’t have such benefit with the Senate’s aggregate fee plan, and in turn would end up paying all of the $40 billion as it currently stands. Furthermore the Senate’s aggregate fee plan will surely stunt the job growth just starting to take seed. Worse, it could drive further off-shoring in our global economy where US chartered companies are looking to save operational and developmental costs. All this –though discouraging- does give us some professional insight as we have had 4 new operations/manufacturing positions added within the past few weeks, all with an increased emphasis on lean and out-sourced/off- shore manufacturing management. We weren’t sure if this was just a coincidence, but now we believe it to be connected.

Connections, compromises, and corporate taxation aside, whether or not the House will have any impact on the Senate remains to be seen, however we at Legacy remain optimistic that there will be some change in the current plan if it continues to be contested. We understand no companies are eager to be taxed more, but it’s our hope that the additional tax won’t place the burden on consumers and cause healthcare reform to hurt the very people it’s trying to help. Let’s all hope for the best.

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