Focus, Health Care, and Manufacturing

Tax targets device makers

October 4, 2013
| By Pat Evans |
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Buried in the more than 2,000 pages of the Patient Protection and Affordable Care Act is a section pertaining to medical device manufacturers.

It includes a 2.3 percent excise tax on the manufacture and importation of medical devices. The tax is one of many budget-balancing portions of the ACA, and would bring in nearly $29 billion in 10 years, according to an article from the Center on Budget and Policy Priorities.

That portion of the bill still is up in the air as House Republicans are looking to repeal the tax.

The sting for West Michigan medical device manufacturers could be significant, however.

“There are some concerns from the members on how this will affect them,” said Eric Icard, director of the Michigan Medical Device Consortium. “That’s a huge margin.”

Icard said surveys returned from area manufacturers aren’t reflecting any pain yet, but some had asterisks.

In November 2011, Stryker Corp. announced its plans to lay off 1,000 people should the tax go into effect. Those layoffs, representing 5 percent of the company’s work force, were completed in 2012, according to a company spokesperson.

Stryker predicted the new tax would cost the company an additional $150 million, and the moves would keep the manufacturer from passing along that increase to customers.

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