Tim Marker: Congress should permanently end the medical-device tax

Indiana is a breeding ground for medical innovation. Over the last few decades, our state has developed a robust medical-technology sector that is now the fifth-largest in the country. In the Hoosier state, economic growth is embedded in health- and life-saving medical innovation.

I work alongside 74 employees who repair and refurbish ultrasound medical devices. I’m proud of the work we do, not only because of the economic benefits we bring to the community, but also because we have a hand in building medical tools that improve the health of countless Americans.

All told, Indiana’s med-tech industry generates $13.8 billion in economic output annually. While we should appreciate this impressive economic boon, we can’t take it for granted. If our lawmakers on Capitol Hill don’t soon take action to repeal a harmful and counterproductive tax on medical innovation, much of the progress we’ve made might be undone.

First implemented as a provision of the Affordable Care Act, the 2.3% tax on the sale of medical devices has been a disruptive force in the medical industry—slowing research and development and thwarting job growth. According to official figures from the U.S. Department of Commerce, the device tax resulted in a net loss of 29,000 jobs from 2013 to 2015.

Since then, Congress has kept the tax at bay by supporting two-year moratoriums, first in 2016 and again in 2018. While this postponement has given temporary relief to manufacturers and medical researchers, this tradition of short-term delays fails to address the fundamental problem. Lacking a clear indication that the tax will be repealed, uncertainty reigns as manufacturers grapple with planning for a tax bill that might or might not come due.

Supporters of the medical device tax say it makes insurance more affordable. While never true, the data clearly shows that the expected federal revenue from the tax when it was implemented fell short by over $2 billion—a clear sign that the policy is flawed and makes a minimal contribution to insurance premium subsidies.

Along with undermining jobs and disappointing revenue collectors, the device tax also harms investment in medical research. During the two-year window the policy was in effect, millions were siphoned away from research and development—a troubling reality with deep implications for patients dependent on the next generation of medical breakthroughs. Looking forward to 2020, some estimates suggest this figure might significantly grow if the tax is re-implemented.

With the window for action quickly closing, lawmakers on both sides of the aisle must come together and repeal this innovation-suffocating tax. This is a bipartisan issue, with strong support from members on both sides of the aisle. Excuses for inaction are simply unacceptable. Industry stakeholders and the wider patient population shouldn’t be held hostage by a policy with few benefits and many unacceptable costs.

Indiana should continue to develop a health care economy that works to lead the world in breakthrough medical innovations that improve treatment, save lives and create thousands of good-paying jobs. Repealing this tax is an important step in that direction.•

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Marker is business segment leader at Noblesville-based GoldSeal Ultrasound.