Multi-State – Why the Medical Device Tax Should Be Repealed


Key Findings

  • The medical device tax, part of the Affordable Care Act, is a 2.3 percent excise tax on the price of taxable medical devices sold in the United States.
  • The tax has been suspended since 2016, but the current moratorium will expire by the end of 2019, unless Congress extends it or repeals the tax outright.
  • If imposed, the excise tax would result in a decline of 21,390 full-time equivalent jobs and a reduction in GDP of $1.7 billion.
  • Research has been published confirming the negative effects of the medical device tax on industry and consumers. The tax fails to lower health-care costs for consumers but increases costs and burdens on the health-care industry.
  • The medical device tax is not sound tax policy due to its complexity and adverse economic effects.

Introduction

In 2010, Congress enacted the comprehensive health-care reform known as the Affordable Care Act (ACA). A small but important part of the bill was the medical device tax, an excise tax based on the price of medical devices. It is levied either on the manufacturer, producer, or importer of the device.

Currently suspended, the tax was in effect between 2013 and 2015. While in effect, the tax resulted in higher prices as well as less research and development (R&D).


For The Full Story: taxfoundation.org

tax foundation
by ulrik boesen
december 3, 2019