In order to pay for the Nation’s new healthcare program, the IRS hopes to raise $30 billion and they don’t plan on having a bake sale to get the cash. Under the Health Care and Education Reconciliation Act (P.L. 111-152) a 2.3% excise tax will be levied on medical equipment starting January 1st, 2013. Amid growing fears that the tax will have far reaching and negative impacts on the healthcare system, both Democrats and Republicans are coming together in hopes of repealing the excise tax.
Known as the Medical Device Tax, its aim is to generate revenues to help pay for the addition of health care benefits to millions of new Obamacare recipients. But how could a seemingly innocuous 2.3% tax hike on manufacturers of medical equipment have any impact on the citizen at large? At least they aren’t increasing my taxes you might think, right? Like a Trojan horse, this tax is being ushered into our cities but once inside the proverbial gates, it could destroy many of the innovative companies that develop and build the machines which make modern medicine possible, lead to job losses and an increase in health care costs, according to John A. Sparks from the Washington Times.1
We take for granted the wondrous, beeping, chirping and dripping, life-saving machines that fill our hospital room floors and stand vigil at our bedsides when we are sick. We have come to expect that scanning MRI, Ultra Sound and X-Ray devices will help our doctors see into our bodies, diagnose, and treat our medical conditions. As my boss likes to quote from the Pearson, Sabin, Emanuel book, “No Margin – No Mission”, the Medical Device Tax slices over half of the margin, or profit, from the companies hard at work, creating and manufacturing the equipment that make American modern medicine possible.
The attentive reader might ask how could a measly 2.3% tax confiscate over half of a business’s profits? First, this tax is imposed on revenue, not profit, like most commerce taxes. To understand, if a business develops and makes an MRI machine that generates $1 million in its first year of sales, but has only seen an actual profit, after all business expenses, of $40,000 the company would be taxed on that $40,000. The government would take its share of the profits. However, this tax is levied on revenue, not profits. Instead of taking a percentage of the $40,000 profit, the government will take 2.3% off the $1 million in revenue or $23,000. That’s 58% – more than half the company’s profits – if they even have profits. It may take years for the revenue from a new device to generate a profit but the company is required to pay out 2.3% on revenue, regardless, ensuring many companies could be forced to close their doors.
Foreseeing the negative impact, the tax will have on the financial future of the medical technology industry, investment in health care technology companies has already begun to retreat, reaching anemic levels. Elizabeth McDonald, noted business journalist explains that capital funding for the medical equipment industry during the third quarter of 2012 reached the lowest it has been in almost a decade.1 According to a Price Waterhouse Coopers paper published August 2011 a broad coalition of medical technology companies and leading associations consisting of over 400 companies, the U.S. Chamber of Commerce and other investment firms all believe the new tax will lead to job losses, reduction in research and development and burdensome administration. The tax will “harm patient care and thwart innovation and job creation at a time when we can least afford it, “ said Mark Leahey, President and CEO of the Medical Device Manufacturers Association (MDMA).2 Bruce Josten, Executive Vice President for Government Affairs at the U.S. Chamber of Commerce echoes Leahey’s statement saying that, “Allowing the medical device excise tax to take effect would undermine patient care, stifle innovation in medical technology, and further damage our economy.”3
The Medical Equipment Tax has US manufacturers of medical products scrambling to raise prices, eliminate jobs and revise their business strategies. Congress wants you to think the tax won’t affect the general consumer since it’s not imposed directly on you. Remember, “No Margin – No Mission” and without profits, the medical device industry will languish, irreparably damaging healthcare on the whole. Although it’s aim was to raise money to pay for Obamacare, the Medical Device Tax may hobble the health care system it is intended to fund.
How do you think the Medical Device Tax will impact you and your healthcare?
Craig Hood is Executive Vice President of Scrip Companies and Founder of Allegro Medical (AllegroMedical.com), the leading online supplier of medical equipment and home health care supplies.
1The Washington Times – “Obamacare tax on medical devices hurts jobs and health”
2Medical Device Manufacturers Association (MDMA) – “Broad Coalition Urges Congressional Leaders to Repeal Medical Device Tax”, July 18, 2011
3Price Waterhouse Coopers (PWC) – Medtechfocus, “Med tech companies further debate over US competitiveness, raise question about impact of excise tax on innovation”, August 16, 2011 http://pwchealth.com/cgi-local/hregister.cgi/reg/medtech-focus-on-excise-tax.pdf
I use my pedal exerciser at home while watching t.v. and it works great. And we certainly sell plenty of pedlars and stationary bikes to elderly, recuperating and mobility-challenged customers, but who would think to use it while working at a desk?
MSN health writer Diane Mapes did!
Does it work? Read Teeny Bike Pedals Away ‘Sitting Disease’ Fears – msnbc.com.
Glamour Fitness Trend author Sarah Jio followed suit with Fitness Trend: Burn Calories at Your Desk With This Inexpensive Gadget – Glamour.com
So, I guess it is official. Allegro Medical’s Resistive Pedal Exerciser Stationary Bike ($26.95) may be your answer to pedaling your bottom off while you work.
Will a Pedlar work for you? Even if you can’t manage it under your desk, you can use it all sorts of places. Pedlar exercisers are transportable, generally inexpensive and span a large range of options. Order one today and we’ll ship it to your doorstep.
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Medical supplies are desperately needed in Haiti. Individuals, offices and medical facilities are being asked to donate medical supplies to their state and local churches and relief organizations for delivery to earthquake victims in Port au Prince and outlying areas. Allegro is supporting this effort by offering discounted medical supplies and medical equipment to the public, nationwide.
People are asking, “How can I help the earthquake victims?” Medical supply and medical equipment donations are your way of ensuring that these critical products reach those in need of medical help. You are essentially helping to save lives. To find donation sites in your area, google “medical supplies donation sites (your city or state)”.
Sources from state and local organizations nationwide are asking for the following medical supplies:
Exam Gloves – Save 40% on a box of 100 Invacare Powder-Free Vinyl Exam Gloves. Only $5.95. Save even more on boxes of 1000. Save 27% on Sterile Surgical Gloves.
See all discounted Surgical Medical Supplies
Wound Care Supplies – Save 25% or more on Bandages, Wound Care Dressings, Gauze, and Tape.
Syringes & Needles – Save 40% or more on Needle/Syringe Combos, Hypodermic Needles, Sharps Disposal and Syringes.
Alcohol Wipes & Prep Solutions – Save 51% on alcohol prep pads.
Elastic Bandages, Splinting & Casting Supplies – All shapes and sizes of orthotic and orthopedic supplies are needed.
Hand Sanitizers, Antiseptics and Disinfectants – Save on all sanitizing medical supplies.
See all Personal Protection medical supplies.
Emergency Medical Supplies – Save 60% and more on Disaster Relief and Disaster Prep medical supplies including First Aid Kits, Hygiene Supplies, and Emergency Water and Water Purification Equipment
Condition related medical supplies are also needed including Catheters, Incontinence, Ostomy Supplies and Diabetic Supplies. Nothing is too specific.
The list of medical products needed does not end with just medical supplies. Durable medical equipment is also in short supply in Haiti. For larger donations see Walkers, Canes, Crutches, Wheelchairs, Ramps, Heart Defibrillators and Bathroom Assists.
How can you help? Join the thousands of people supporting the humanitarian efforts in Haiti by donating medical supplies to your local donation sites. Your donation will not be in vain and no donation is too small. Every bit will help.
Thank you for being an Allegro customer.
TEMPE, Ariz. – March 20, 2007 – Allegro Medical, the premier online store for medical equipment and supplies, today announced “Shop by Condition”, a navigational tool designed to help customers find products for a particular ailment. From the Allegro Medical home page, visitors can elect to Shop by Condition and view a list of 37 common medical situations, disabilities and diseases linked to thousands of condition-specific products to browse and buy.
“Until now, it hasn’t been so easy to identify products that might alleviate, say, back pain, or stress, or even snoring, for example,” says Craig Hood, Allegro’s President and Founder. “But by shopping by condition, visitors can quickly find a variety of products identified by the manufacturer or supplier as appropriate for these conditions. It’s an easy and discrete way to shop.”
Since making their online debut nearly 10 years ago as the first broad spectrum medical equipment and supply e-commerce Company on the Internet, AllegroMedical.com has increased its product line to 30,000+. How do customers find what they’re looking for? According to Hood, “Shop by Condition is just one of four navigation tools on the site. Visitors can also Shop by Category, Sub-category, Brand and search box. With such a massive product catalog, developing a more targeted approach to finding products was the logical next step in the development of the site.”
Examples of products in Conditions:
Allergies – air purifiers, humidifiers, ionizers, allergy-free pillows & pillow cases, saline, flow meters
Bed Wetting – alarms and water-proof bedding
Blind/Low Vision – big button products, talking appliances, Braille items, magnifiers
Cold/Flu – light therapy, thermometers, monitors, pain relievers, sanitizing gel, Echinacea, vitamins
Hearing Impairment – assistive listening devices, amplifiers, signalers, headsets
Weight Loss Help – exercise equipment, nutritional supplements, heart rate monitors, fitness videos, Yoga, Pilates
While visitors can browse solutions for common medical problems, Shop by Condition also caters to those with longer-term conditions. For example, parents and pregnant women will benefit from a visit to Pregnant/Newborn. Diabetics will surely find something they need in Diabetes, and caregivers and health care professionals can easily shop on behalf of their patients by searching for specific illnesses such as Alzheimer’s, Cerebral Palsy and Multiple Sclerosis.
The Company plans to add more Conditions. In deciding what to launch first, Allegro chose some of the most common medical ailments, drawing from historical data of close to 1 million customers. To make
shopping even easier, when visitors click on a particular Condition in the drop-down window, the products display with the “most popular” first and can also be sorted by price or product name.