Devices & Diagnostics

Pressure on med device tax intensifies — and spawns an infographic

As Congress can’t make any progress on the sequester despite the pain it will mean for healthcare, medical research and education, it’s easy to understand why the medical device tax isn’t on the radar. People keep beating the drum to remind Democrats and Republicans about the unfair nature of the tax and the hit to […]

As Congress can’t make any progress on the sequester despite the pain it will mean for healthcare, medical research and education, it’s easy to understand why the medical device tax isn’t on the radar.

People keep beating the drum to remind Democrats and Republicans about the unfair nature of the tax and the hit to jobs.

These three efforts are the latest attacks on the tax. There are several ways to add your voice to the conversation. Take a look, pick one and get involved.

Shift the Burden

The newest idea is from consultant Tom Malm: Cut federal employee benefits to replace the revenue from the tax. Malm suggests that reducing health benefits for federal employees even a little bit would cover the cost of the tax. Here is his math based on a December 2012 publication from the U.S. Bureau for Labor and Statistics:

Government employees received 97.5% more in healthcare benefits than the private-sector employee. Reducing that disparity so it is only 82% more will offset the MDET. The per-hour wages and benefits of a government employee are over $12 per hour more than the private sector, their wages are higher by $6.55 per hour, and their healthcare benefit is $4,992 per year greater than the average benefits a businesses must offer to compete for employees in our market economy. This is the average for 3.7 million federal, state and local government workers.

A January 2012 report from the Congressional Budget Office states that “benefits accounted for about 39 percent of total compensation (the sum of wages and benefits) in the federal sector versus 30 percent of total compensation at large firms in the private sector.” Strangely, federal employees with less education earn 36 percent more than private-sector employees with similar education. Federal employees with a professional degree or Ph.D. make about 18 percent less than private-sector employees with similar education.

The report concludes that “Overall, total compensation for federal employees was about 16 percent higher, on average, than total compensation for measurably similar workers in the private sector.”

Whether or not you think making bureaucrats pay more for health insurance is a good replacement for the device tax, Malm is right about how to frame the issue to get action:

Unless you are touched by the MDET directly, and understand the industry nuances, hearing that a 2.3% tax is insurmountable is just noise. To everyone else, it’s like complaining about gas prices.

The only way MDET can go away is to find a substitute source that everyone (except perhaps the government employee) could be “for.” Frame it with this question: Is it reasonable that you get up in the morning and work for fewer wages, lower benefits and less security than the guy at Motor Vehicle who had you lose a half day’s wages just to renew your driver’s license?

It is a new idea, but it’s also a way for Malm to get paid for his strategic thinking: “The fee for participation will be $450 per company. A minimum of 15 companies will be necessary in order to launch.”

Call your Senators

Rep. Erik Paulsen (R-Minn.) spoke with the Medical Devices Group on LinkedIn to update everyone on what he is doing to overturn the tax:

In the new Congress, I have already introduced legislation to repeal the tax again and have gained 187 co-sponsors. We have the support in the House, but in order to see this bill put into law, the Senate must also act. We need your help in making this legislation a reality.

Here is a list of the House co-sponsors, and here is a list of the Senate co-sponsors.

Check out an infographic

AdvaMed announced its 2013 priorities and, of course, the tax was at the top of the list. The group also published an infographic that offers some new numbers on price increases over the year and the impact of previous cuts on the device industry.