Medical device makers: Jan. 1 tax could cost jobs
BOSTON (AP) — Medical device makers in Massachusetts and elsewhere are warning of potential job losses and other consequences as the industry's hopes of avoiding a 2.3 percent excise tax fade amid the stalled fiscal cliff negotiations.
The tax, scheduled to take effect on Jan. 1, is expected to raise $20 billion over 10 years. It's one of several taxes imposed on segments of the health care industry to help pay for President Barack Obama's health care overhaul.
Lobbyists for medical device makers say implementation of the tax could jeopardize about 43,000 jobs nationwide in a $64.7 billion industry. They say companies have shed about 6,000 jobs in the past year, some in anticipation of the tax, while others might scuttle expansion plans or cut back on research that can lead to medical breakthroughs.
"It's been a year of uncertainty, and now we are looking at this tax coming at us," said Thomas Sommer, president of the Massachusetts Medical Device Industry Council. "And until it really goes into effect we are not going to know where the reductions in other areas are going to come."
The industry has been trying for much of the past year to persuade Congress to repeal or at least delay the tax, and it still clings to the slim hope that a postponement could be attached to any fiscal cliff deal that might be reached in Washington in the coming days.
In Massachusetts, the nation's second-largest medical device producer behind California, the repeal effort has been embraced by Democrats who are otherwise avid backers of the federal health care law.
U.S. Sen. John Kerry and Sen.-elect Elizabeth Warren were among 17 Democratic senators or senators-elect who signed a letter earlier this month asking Senate Majority Leader Harry Reid to support a delay in the tax. Opposition to the tax was a rare area of agreement between Warren and Republican U.S. Sen. Scott Brown, who opposes the federal health care law, during their recent campaign.
U.S. Reps. Niki Tsongas and William Keating were among Massachusetts House Democrats who backed a Republican-sponsored bill to repeal the medical tax device in June. Democratic Gov. Deval Patrick has also lobbied the White House to hold off on the tax.
Annual sales of medical devices made by Massachusetts companies are about $13 billion and medical devices are the top exported commodity out of the state, Sommer said.
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