Key Points: The Patient Protection and Affordable Care Act (Obamacare) imposes an excise tax of 2.3 percent on medical equipment and supplies, effective in 2013. Regardless of the past and recent profitability of investment in the research and development of new and improved medical devices, this tax will reduce such investment. A conservative estimate of this adverse investment effect is about 10 percent annually through 2020, or about $2 billion per year. Based upon the peer-reviewed literature on the relationship between investment in medical technology and improvements in life expectancies, this investment decline can be predicted to yield an annual decline of about 1 million expected life-years for the U.S. population, concentrated upon particular population subgroups. The economic cost of that reduction in expected life-years would be at least $100 billion per year, a sum substantially greater than the entire U.S. market for durable medical equipment and other medical products. Accordingly, the excise tax on medical devices should be repealed.capital ideascontrarianenvironmentalnotescapital IDEASHEALTH POLICYprescriptions Volume 10, Number 5
Obamnacare’s Tax on Medical Devices
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