Time to repeal the Medical Device Tax

Rob Portman
By Rob Portman

Since the day it was passed, conservatives have argued that the Affordable Care Act would destroy jobs. President Obama’s decision to delay the employer mandate contained in the health care law because it would undermine an already fragile jobs market serves to confirm our worst fears. But while the President’s action has given a brief reprieve to businesses and job creators, the delay is only temporary. Worse still, there are other job-destroying provisions in Obamacare that are already wreaking havoc across the nation and particularly here in Ohio. One of them is the medical device tax.

America is better off when we are building things. We have a powerful service economy, but the backbone of our greatness has always been our builders, our manufacturers, and our innovators. We’ve seen that first-hand in Ohio. Manufacturing is in our blood.

Today, we in Ohio are blessed to have a thriving and robust biotechnology sector. In fact, biotechnology-related companies account for over 60,000 jobs in our state, and that number is projected to grow even more.

It’s hard to overstate the impact the industry has on our state, both directly and in the ripple effect felt throughout our communities. At a time when more than ever we need “Made in America” innovation, the medical technology industry is one where we are a leader on the world stage. This industry is creating good jobs here at home, producing beneficial products for the health care field, and helping grow our economy by shipping American goods overseas. We should be doing everything we can to encourage growth in this industry.

Unfortunately, there’s growing concern that a little known provision in the Affordable Care Act could put America’s leadership position in danger, costing Ohio jobs and slowing innovation in the medical device arena.

Recently, I met with Zimmer Surgical, a company that employs more than 300 workers in its Dover, Ohio facility. They expressed the same concern I’ve heard at bio-tech companies I’ve visited from Cleveland to Columbus to Cincinnati. As a result of the Affordable Care Act, starting this year companies like Zimmer are required to pay a 2.3 percent excise tax. This excise tax is different from taxes that companies normally pay. Instead of taxing a company’s product, the excise tax in the Act applies to revenue—without regard to whether the company is actually making any money.

Such a tax both chills innovation and harms the prospects of new start-ups in Ohio.

Established companies will be forced to divert resources from areas like Research and Development to pay this tax, while new companies—some of which struggle for years to become profitable—may not survive it at all. The founder of Zimmer told me that had this tax been in place when he started, his company would never have made it off the ground.

At a time when the economy of our state and nation has not yet fully recovered from the recession, anything that kills jobs and hurts Ohio businesses is a bad idea. The medical device tax will cost Ohio hundreds of millions of dollars in economic impact that we can ill-afford.

Opposition to this tax has been strong and it has been bipartisan. I recently joined with 78 of my colleagues in the Senate to make it clear that the repeal of the medical device tax is a priority for both parties. I am hopeful we can get rid of this tax once and for all very soon.

As I travel throughout Ohio, not a day goes by without voters making it abundantly clear to me that they want Members of Congress to work together in a bipartisan manner to promote policies that will get hardworking Ohioans back into the workforce. I couldn’t agree more, and repealing the job-killing medical device tax is a great step forward in achieving that goal.

Rob Portman is a United States Senator from Ohio.