| Medical Devices will have a new tax after healthcare bill is passed |
After reading an article in the Wall Street Journal I thought I might share some of the key findings from it that could effect our customers. It seems their is a 2 billion a year tax on all medical devices (not medical supplies) that is coming with the new healthcare reform. It should not influence us after further research. The only current debate with the bill is will it start in 2010 (Senate) or 2013 (The House).
The earlier implementation date could hurt because it could take awhile for device makers such as Medtronic Inc. (MDT), Boston Scientific Corp. (BSX) and Johnson & Johnson (JNJ) to start seeing benefits from expanded insurance coverage under health-care proposals.
Bernstein Research analyst Derrick Sung estimated the proposed tax would hurt industry earnings by 3% to 4%, but he said the impact looks “manageable” because of the potential for offsetting sales linked to expanded coverage.
Industry lobbyists had pushed aggressively to get the tax slashed from the original $4 billion proposal, which seems to have worked.
The Senate bill will won’t tax Class I devices, such as tongue depressors, or Class II devices that retail for less than $100. The House bill excludes all medical devices sold at retail stores.
The Senate bill also divides how the tax would be imposed based on a firm’s annual sales. Companies with annual sales below $5 million won’t be required to pay a fee, while those with annual sales above $5 million would have to some sort of fee.
This tax seems like it would just increase the cost of medical devices paid for by your government insurance company? So the money just goes in a circle it seems to me. What do you think?
Tags: healthcare, medical devices, medical supplies
