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Michelle Malkin
Michelle Malkin
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Taxing Medical Progress to Death


Two years ago this month, as public debate over Obamacare raged, former President Bill Clinton rushed to the hospital because of a heart condition. He immediately underwent a procedure to place two stents in one of his coronary arteries. It was a timely reminder about the dangers of stifling private-sector medical innovation. No one listened.

Stents don't grow on trees. They were not created, developed, marketed or sold by government bureaucrats and lawmakers. One of the nation's top stent manufacturers, Boston Scientific, warned at the time that Obamacare's punitive medical device tax would lead to worker losses and research cuts. The 2.3 percent excise tax, the company said, "would be very damaging to Boston Scientific, and the medical device industry as a whole. In a nutshell, it would raise costs and lead to significant job losses. It does not address the quality of care but the political scorecard of savings."

Two years later, Bill Clinton's doing just peachy. But many medical device manufacturers are suffering, and many more are preparing for the worst as the White House gears up to collect on an estimated $20 billion from the lifesaving industry. In typical Obama-transparent fashion, the Internal Revenue Service quietly released a complex thicket of medical device tax implementation rules in a Friday document dump earlier this month. Barring congressional intervention, the medical device tax will go into full effect in 2013.

Cook Medical, which manufactures products for everything from endovascular therapy, critical care medicine and general surgery, to diagnostic and interventional procedures, to bioengineered tissue replacement and regeneration, gastroenterology and endoscopy procedures, urology, and obstetrics and gynecology, has called for the levy's repeal. Cook Group chairman Stephen Ferguson noted the tax burden amounted to a whopping 55 percent of its profits.

"For a company like ours, which pays 35 percent of our net earnings in federal corporate taxes and another 4 to 5 percent in state and local corporate taxes, the excise tax translates to another payment that will consume 15 percent more of our earnings," he estimated.

"This creates tremendous pressure for us to move manufacturing to Europe and other parts of the world." According to the trade publication Mass Device, the company has already canceled plans to build a new factory in the U.S. because of the Obamacare tax burden.

Stryker, a maker of artificial hips and knees based in Kalamazoo, Mich., announced in November that it would slash 5 percent of its global workforce (an estimated 1,000 workers) this coming year to reduce costs related to Obamacare's taxes and mandates.

Covidien, a N.Y.-based surgical supplies manufacturer, recently announced layoffs of 200 American workers and plans to move some of its plant work to Mexico and Costa Rica, in part because of the coming tax hit.

Mass.-based Zoll Medical Corp., which makes defibrillators and employs some 1,800 workers in the U.S. and around the world, says the medical device tax will cost the company between $5 million and $10 million a year. Its profit in 2009 was $9.5 million. "Running our company at close to break even would not be a sustainable position for us," CEO Richard Packer said in a public statement, "so we will be forced to look at alternatives."

Those "alternatives" include cutting payroll, cutting R and D and passing on the costs to patients, of course. Industry estimates put the tax-induced job losses at 43,000. So far, the number-crunchers at 1600 Pennsylvania are mum on the number of potential jobs — and lives — destroyed by the medical innovation death tax.

In fact, the Obama administration's response so far has been a flippant shrug. Treasury Secretary Tim Geithner, whose only manufacturing claims to fame are faulty tax returns and near-double-digit unemployment figures, brushed off concerns this week about the medical device tax. Obamacare's expanded access to health care, he argues blithely, will create more consumers for their products. "On balance, it is a good package for people in the health care business," he told Bloomberg News.

Fewer jobs. Fewer entrepreneurs. Fewer medical advances. Only with a gallon of self-delusion does the Obamacare medical tax medicine amount to anything other than economic and medical malpractice.

Obama 2012: Winning the future ... by killing it.

Michelle Malkin is the author of "Culture of Corruption: Obama and his Team of Tax Cheats, Crooks & Cronies" (Regnery 2010). Her e-mail address is



10 Comments | Post Comment
Michelle the corporate pimp. They can't get their way and you're outraged! They find they have to pay to play so they threaten to take their toys and go home or take their jobs to another country. Should we all quake in our boots because another unpatriotic company wants to leave America? Especially when we are the country that gave them all the start up breaks. Get Serious! Do you think we don't know they've been passing their costs on to patients from day one! I understand the that in a free market these companies should be allowed to continue overpricing their goods and not lose their obscene profits having to pay taxes in the country in which they do business. The country in which the people who buy, pay for, and use their merchandise live. Regardless of what you may choose to print, they've enjoyed a low tax rate and all kinds of breaks and corporate benefits so please stop with the bs. The fact is taxes support this country and the people that live here. Or should I say potential customers. So typical. You could have taken the high road and raised the very same argument of patriotism topping profit, but you choose the low road every time.
Comment: #1
Posted by: demecra zydeem
Fri Feb 17, 2012 12:19 AM
I got Michelle's point. Although her article spends too much time citing examples and does not tie it all together very well for us. She stated this: "Fewer jobs. Fewer entrepreneurs. Fewer medical advances" (Malkin, 2012). To me it means that Obama's bill (law now I guess) does not fund jobs and does not fund medical research. Is that true because I never read that bill myself from page 1 to the end. I think there is a website where we can actually read bills and laws if you have the time and comprehension level to spend on reading it. However, I got Michelle's main point that the taxes are paying for things other than the main needs in the US. In other words, "Where's the Beef?". It's nice to see an Asian female is not completely behind Obama and she can think clearly for herself.
Comment: #2
Posted by: Bkk Willy
Fri Feb 17, 2012 2:07 AM
Quoth demecra

"corporate pimp

they threaten to take their toys and go home

we are the country that gave them all the start up breaks (this one is bizarre, grabbing credit for the
accomplishments of others?)

passing their costs on to patients from day one

their obscene profits

patriotism topping profit"

Your usual litany, but I must tell you, when you are looking up at the ceiling, as I was last month, and a highly dedicated doctor and team is placing a stent in your heart, you know how remarkable these people and devices are. No politicians, the Great Obama included, is in the same intellectual league as these brilliant people. Obama is indecently self grandoise thinking anything he has ever accomplished rises to the level these men and women achieve every day. A prolonged desire to be voted "Prom King", a characteristic shared by all politicians, does not qualify that politician to even understand the first thing about what a doctor knows. Sebelious is not a doctlor, she just pretends to be as smart as one. My wife works in medical education, the rules and regulations and withdrawing of funds that Obamacare entails has begun to hit hard. Who has the government ever saved? NO ONE, and all they can do is get in the damn way. So often, I joust with you, and have fun, sometimes I agree with you, most often not, but I see a humor in it. I think your liberal cant is wrong and stupid most times, but laying on a gurney, looking at the ceiling and feeling immediately better at the hands of a truly trained and wise professional, I don't think your litany is stupid, I know it is stupid. So stupid that I must ask you, in this one case, to shut up. You you don't understand a thing about this subject, it's all theories and grand words to you. You have not faced mortality and had a brilliant angel in blue face it down for and with you. You could not have faced this reality and still believe the completely ridiculous quotes I cite. You would instead feel only gratitude toward all parties involved. Are raving liberals ever grateful for anything? I never hear one thank or congratulate anyone.

Injecting any parties, especially government parties, between patient and doctor is just plain stupid, Obama will be of no assistance to you in the operating room.
Comment: #3
Posted by: Tom
Fri Feb 17, 2012 6:36 AM
Re: demecra zydeem

You have a fundamental misunderstanding of how business or the economy works. Businesses don't exist to be patriotic; they exist to make money for their investors. If they can't make money, the business will fold, period. Higher taxes on an already costly business that requires years of R&D investment and clinical testing to bring a product to market will prevent any business in the field from taking risks on radical new technology.

You want patriotic? Patriotism is embracing the American dream and succeeding through invention. But with few exceptions, people don't innovate if it doesn't pay dividends.
Comment: #4
Posted by: Tom
Fri Feb 17, 2012 10:54 AM

That last Tom is not the Tom from post #3, I guess we come in a set. This is post 3 Tom, and I'm not wild about the claim that businesses exist to make money for their investors, I know that is true but it is a bad reason to be in business. I think the people who developed and marketed the stent now insuring I die of something other than heart failure truly had good intentions, a sense of altruism and doing something good for people. I will not deny a profit motive, but I insist it was secondary to a problem solving motive. You believe otherwise, but most people are doing good with their lives, teachers, police, firefighters, even (blech) lawyers. Meanwhile, most politicians and so called media pundits are in fact driven by lust for power over others. See it, please: Two years ago Obama promises healthcare to everybody, then one week ago he announces to Catholics that they may not follow their conscience concerning their religion. A quid pro quo set up by promises the government has no intention or ability to keep. They also said "No death panels!", but we in fact got 'em being set up and you can't make an appeal. How is that for evil? Any of this fall under your liberal litany? Liberals like to say "You can't stand in judgment of others, and you can't tell me what to do or what to believe.", but isn't that exactly what Obama is doing to Catholics? The government will always need more money because it is run by rats and bums who keep themselves in power by trading votes and cash. They contribute nothing to society, they are the first wave of takers. Today I am much more grateful to the corporation that manufactured my stent than I am to any government agency, I hope they made a damn lot of money because my life is worth it to me. People's motives are basically good, and it is wrong to demonize the inventors, the creators, and the investors. Michelle Obama will not be in the waiting room when your moment comes. The spirit of invention and altruism will be. You better hope and believe that whatever device saves your life one day was manufactured with good intentions. From post # 3,
Comment: #5
Posted by: Tom
Fri Feb 17, 2012 11:41 AM
Tom, we take adversarial positions but are not adversaries, not on my part. I agree with the majority of your statement in your last comment but don't agree we have death panels due to Obamacare nor that Obama is waging war on Catholics and religion. It's possible you don't consider we have and have had what you call "death panels" ever since health care decisions were taken away from the patient and the Doctors and nurses and put into the hands of Health Care Insurance personnel. You do realize the only reason you had your life-saving surgery is because you and your Insurance carrier agreed and were able to pay for it? And that doctors and health care providers, pharmaceutical companies, all reap higher profits by just treating patients rather than curing them? You do know that though the US offers the best medical care in the world it is only for those who can afford it and whose insurance plan will pay for it. Do you know the life expectancy and infant mortality statistics place the United States in the bottom quartile of industrialized countries?

As for your Catholic, religious freedoms opinion, we differ because it smacks of Religious Imperialism to me and that is un-Constitutional. The first amendment was explained in the words of Thomas Jefferson, "the clause against establishment of religion by law was intended to erect a wall of separation between church and state." I believe a secular goverment allows religious freedom for all. I also believe religious beliefs and theology, not God, should be kept out of politics. Contrary to the myth, OUR COUNTRY WAS NOT FOUNDED ON CHRISTIAN PRINCIPLES, IT WAS FOUNDED ON FREEDOM FROM RELIGIOUS PERSECUTION. So there you have it. Now if you disagree, I respect that. But you may want to consider Muslim countries are called just that because the Koran is the rule of law as interpreted by the most extremist branch(s) of the Muslim faith. I don't believe or follow Sharia law just as I don't believe or follow Christian, Jewish, or any other man-made religious law. Our Constitution, the amendments, The Bill Of Rights, Declaration of Independence all guarantee, if followed, that we will not be just another country based on extremist religious views.

We were all born with free will but following a rigid religious dogma takes away free will and makes it a slave of the dogma. In my view the Pope and the Mullahs are the largest slave owners on the planet. Neither the body nor the soul is free when free will is given away to religious dogma.
Comment: #6
Posted by: demecra zydeem
Sat Feb 18, 2012 7:59 AM
Demecra, I do agree. Can't you see that not allowing Catholics to practice their religious beliefs and still be in health care fields IS RELIGOOUS PERSECUTION? God , wake up dear. No one forces you to go to their clinic, there are other options, but penalizing and making demands of Catholics IS RELIGIOUS PERSECUTION. Puhleeze.!
Comment: #7
Posted by: Tom
Sat Feb 18, 2012 2:56 PM
Demecra Zydeem,
The "wall of seperation" that misinformed liberals so often site to support their cry for seperation of church and state, is actually refers to a wall designed to keep the government out of the church, NOT the church out of government. The letter was written to let the Danbury Baptist know that they did not have to worry about government intrusion into their worship practices. It had nothing to do with keeping Christian influence out of government. Read the staetment in context. Better yet read the whole letter.
Here is the statement in context.
"Believing with you that religion is a matter which lies solely between Man & his God, that he owes account to none other for his faith or his worship, that the legitimate powers of government reach actions only, & not opinions, I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should "make no law respecting an establishment of religion, or prohibiting the free exercise thereof," thus building a wall of separation between Church & State."
Comment: #8
Posted by: Richard
Sat Feb 18, 2012 4:29 PM
Re: demecra zydeem

The choice of the patients and doctors were given to the insurance companies by the federal government. But of course the social progress solution to the unintended consequences is always more government intervention. The reason religion comes up so often, usually with education and now with health care, is because government gets involved with institutions it has no business being involved with.
Comment: #9
Posted by: SCOTT
Fri Feb 24, 2012 10:48 PM
Another foolish, clueless response from Demecra. Take their toys and go home? No they will just go to another country to escape the second-highest tax rate in the world. They might be able to stomach it if the government wasn't so incompetent, corrupt, inefficient, and wasteful. So Demecra how do you suggest keeping them here, by force? That only worked for a while in the communist/socialist world before it completely imploded in the late 1980's. Please amuse me with more of your outdated ideas that all failed last century.
Comment: #10
Posted by: Thetruth
Sat Feb 25, 2012 2:34 PM
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