Medical device tax jobs toll: 33K and counting, says AdvaMed

AdvaMed has surveyed its members about the medical device excise tax that Obamacare ushered in last year. The med tech industry trade group found that companies reported job losses, R&D cuts and slackening investment in U.S. manufacturing.

The online survey solicited responses from member companies at the end of 2013. According to AdvaMed, based on their responses, 14,000 med tech industry workers have lost their jobs as a result of the medical device excise tax (MDET). Another 19,000 potential jobs were lost to forgone hiring for a total job-loss impact, by AdvaMed's count, of 33,000.

In addition, about a third of respondents said they had cut R&D spending as a result of the tax. Nearly 10% said they had relocated manufacturing abroad or expanded offshore facilities due to the tax.

AdvaMed CEO Stephen Ubl

"As a result of the medical device tax, we have seen an unprecedented impact on jobs and key investments in R&D," AdvaMed CEO Stephen Ubl said in a statement. "The findings of the report underscore the need to repeal this tax."

The report quoted several anonymous respondents from their answers to an open-ended question seeking comment. "As a start-up company getting ready to launch a product, the MDET will create a $300K potential debt/cash-flow problem," one wrote. "I can't afford to be successful!" Another reported a move to close a U.S. plant, offsetting about 70% to 80% of the excise tax's cost.

Last year was the first for the medical device tax. Introduced with the Affordable Care Act, the 2.3% tax is expected to raise $30 billion from the industry over a decade beginning Jan. 1, 2013. Industry won some concessions before health care reform's approval. But so far, efforts to repeal it have failed. 

The bulk of AdvaMed's survey questions concerned the med tech tax's first-year impacts. But the association reported members said they expect further impacts in the future. Half said they'd consider cutting R&D without a device tax repeal, and 58% said they'd consider job cuts. 

Responses were generalized based on a ratio of respondents' revenues to revenues of the overall industry, AdvaMed said. 

- read the AdvaMed press release
- here's the survey (PDF)

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