Off the Charts - With congressional Republicans
reportedly planning a renewed push to repeal the medical device tax, a
Congressional Research Service report updated this week is especially notable. It confirms what
we’ve been saying for some time: The 2.3-percent excise tax, which will
raise $26 billion
over the next decade to help pay for health reform, has only a very
limited economic impact, contrary to the dire predictions of industry
lobbyists.
- “The effect on the price of health care,” CRS says, “will most
likely be negligible because of the small size of the tax and small
share of health care spending attributable to medical devices.”
- “The drop in U.S. output and jobs for medical device producers due
to the tax is relatively small, probably no more than 0.2%.”
- “It is unlikely that there will be significant consequences for innovation and for small and mid-sized firms.”
- “The tax should have no effect on production location decisions,
since both domestically manufactured and imported medical devices are
subject to the excise tax.”
In short, the scare talk about the medical device tax doesn’t square
with reality. Moreover, proponents of repeal need to explain how they
would replace the billions in lost revenue.
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