The medical device tax is also hidden from the consumer, who is generally unaware that this tax is priced into the costs of the product. Nor are they aware that the tax has been applied inconsistently across products due to exemptions and short-term suspensions. The exemptions and suspensions also create difficulties for firms to plan and manage the tax, and subjects some medical devices to double taxation.
It’s time to repeal the medical device tax
The medical device tax has an undeniably negative impact on the health care sector. The tax violates the commonly accepted principles of sound taxation and imposes economic costs that dwarf the revenues raised for the government. Further, patient welfare is also negatively impacted. Whether through cost increases that make medical technologies less affordable, or by stifling innovations and new technologies that could improve patients’ quality of life, the medical device tax imposes adverse consequences on overall patient well-being
As a consequence, the right policy response is to permanently repeal the medical device tax. Toward this end, there is a current repeal bill that has been approved by the House of Representatives on July 24, 2018. While as of October 2018 it is unknown whether a repeal vote will take place in the Senate, based on the economic merits, it should. Eliminating the medical device tax will help encourage medical innovation and improve the quality of care provided by the U.S. health system.
About the author: Wayne Winegarden, Ph.D. is a senior fellow in Business and Economics at the Pacific Research Institute.
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