Feb 19, 2014 - 5:15pm

Report: As Many as 165,000 Jobs Lost Because of Medical Device Tax


Senior Editor, Digital Content

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Instruments used to perform bariatric surgery.
Photographer: David Maxwell/Bloomberg.

Health and Human Services Secretary Kathleen Sebelius may want to take back her claim that there is “absolutely no evidence” that Obamacare has caused any job losses. If the Congressional Budget Office report earlier this month wasn't enough, the medical device industry delivered some troubling news about the effects of the health care law's medical device tax.  The Daily Caller reports:

Obamacare’s medical device tax has already created a job loss of 33,000 in the medical device industry and 132,00 more job losses are expected, according to a new report from the industry trade group the Advanced Medical Technology Association (AdvaMed), obtained by the Daily Caller.

The AdvaMed survey breaks down the job losses from the first year that the medical device tax has been in place along with its broader job effects:

The tax has resulted in employment reductions of approximately 14,000 industry workers and forgone hiring of 19,000 workers. The total job impact of the tax on industry employment was approximately 33,000.

Independent estimates of the relationship between direct employment in the industry and indirect employment among suppliers and in the general economy found a ratio of four indirect jobs for each direct job.

Applying this ratio to jobs lost or foregone suggests that the impact of the tax on indirect employment would be approximately 132,000 jobs, for a total job loss due to the tax of as many as 165,000 jobs.

Apparently for Secretary Sebelius, job losses in the medical device industry don’t count.

The survey also finds that because of the tax:

  • 75% deferred, cancelled, or reduced investments and employee compensation.
  • Over 30% said they cut research and development.
  • Nearly 10% said they moved or expanded manufacturing outside the United States.

If it remains on the books, device makers say the medical device tax will continue hurting employees and innovation:

58% of respondents said they would consider reducing employment if the device tax were not repealed.

50% said they would consider reducing R&D investment if the device tax were not repealed. 

A Gallup poll finds that jobs are the most-important issue for Americans. We must help put people back to work by lifting the barriers to hiring and investment. Repealing the harmful medical device tax would be a good step.

Sebelius Disputes Nonpartisan CBO Report

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.