Another Medical Device Survey That Erik Paulsen Won’t Like

On Thursday, John Kline (R-MN-02) tweeted that he visited a large employer in Wabasha

For those that are not familiar with the company, Covidien manufactures, distributes and services a diverse range of industry-leading product lines in three segments: Medical Devices, Pharmaceuticals and Medical Supplies. With 2012 revenue of $11.9 billion, Covidien has 43,000 employees worldwide in 70 countries, and its products are sold in over 140 countries.

Covidien released its latest financial information on January 25, 2013
— First-quarter net sales of $3.06 billion were 5% above the $2.90 billion reported in the comparable period a year ago.
— Medical Devices sales up 8%
— Increasing fiscal 2013 net sales guidance in all segments
Interestingly, in the press release the subject of the Medical Device Tax was not mentioned … or any intention to reduce manpower.

OK … so you get the picture … Representative Kline visited a branch of a large international corporation that overall is doing very well … but he is warning about that dreaded 2.3% Excise Tax for Medical Device products sold in the United States … you know, the one that Erik Paulsen (R-MN-03) wants repealed … as reported on MinnPost “Paulsen’s bill would repeal the ACA’s 2.3 percent excise tax on medical device company sales, ending a $29 billion health care reform funding stream. The goal is to protect jobs — Paulsen said companies have shed about 10,000 so far.”

Gosh … 10,000 so far ? ? ?
But heck, those jobs are already gone … what does the future hold ?

Well, a new survey has the answer.

The Emergo Group released the 2013 Medical Device Industry Survey which was conducted in January 2013, with a total of 3,509 respondents.

First, question … What’s your Business outlook ?
Compared to our January 2012 survey results, medical device firms are even more positive about 2013 than there were about 2012. Overall, roughly 71% of all respondents are positive about 2013, up from 67% a year earlier.

Did your company experience an increase or decrease in worldwide sales during 2012?
More than 43% of companies reported sales increases of 10% or more in 2012.

OK … so business was good last year … and the outlook is good for the future … but now, the BIG QUESTION :
Does your company plan to make any of the following changes in response to the US medical device excise tax?
We asked this question of senior management worldwide, but isolated 657 senior executives at companies located in North or South America (majority in US in Canada).

The majority of participants (41.6%) said they plan to pass along the 2.3% tax increase in their prices.
Equally important, 31.1% plan to work to lower their production costs without laying off employees.
Only 11.1 % of senior managers we surveyed plan to reduce staff in response to the MDET.

The Emergo Group survey re-enforces the opinion that certain politicians are fear mongering by referring to the excise tax as “job-killing” … it appears that the Medical Device Industry future is bright … and as long as it is growing, they will be adding employees … especially after the Affordable Care Act kicks in with 30 million more citizens eligible.

Repealing the Excise Tax will only add to the deficit as Representative Paulsen’s HR 523 has no offset … it’s simply a way for Members of Congress to appear to be trying to save jobs but actually are refunding monies to companies — which appear to be doing just fine.

Representative Paulsen-cited Furchtgott-Roth Economic Enterprises report states :
“The exact change in prices for medical devices as a result of the excise tax will depend on various economic parameters, but an estimated half or more of the excise tax will likely be passed along to end users in terms of higher prices. The tax would likely increase the after-tax prices to American consumers between .02% and 2.1% with most price increases around 1%.”

Everyday there seems to be a story that portrays a different story than the one promoted by “certain” politicians … as companies are beginning to pay the excise tax …
Medtronic reporting that it expect the MDET to half the amount previously projected.
Smith & Nephew said “it was wrong” to blame layoffs on the MDET.

There is NO reason to Refund the payments collected … companies are passing on the excise tax to the “user” just as anticipated and not generating the layoffs projected.

Representative Kline and Paulsen are responding to Corporate interests … the Affordable Care Act should be a Job-creator and positively improve the health of American citizens … IF the politicians have the courage to be honest with the taxpayers that the “user” will pay a small fee producing a healthcare system that is affordable when they need it … but when I hear Representatives Paulsen, Kline et al call the excise tax a “job killer”, they are just undermining our future.

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