The tax provisions of the 2010 healthcare overhaul have already reduced employment, cut research spending and delayed market arrival of new medical technology, business representatives told a congressional panel Tuesday.
Walt Humann, president and CEO of health technology firm OsteoMed, told the Ways and Means Oversight Subcommittee that the law's device 2.3% tax has already led his firm to a first-time firing of 25 employees and reduced its research and development spending.
“As we prepared our 2013 budget last year, and realized this tax would soon be a reality, we had to make the difficult decision to reduce our headcount as well as research and development expenditures,” Humann said.
Humann and other critics of the law said such layoffs are among only the first of many job cuts that will result from the device tax, which will total 45,000 lost jobs, according to 2011 estimates by the Advanced Medical Technology Association.
Other impacts from the law's taxes include other companies reducing employees' work hours to avoid the law's coverage requirements, according to other business representatives.
Rep. Charles Boustany (R-La.), chairman of the panel, said after the hearing that Republicans plan to include a repeal of all of the law's taxes as part of a comprehensive tax code overhaul expected this year. Republicans' goal for that measure to remain revenue neutral could be complicated by their need to find offsets for $800 billion in 10 years of taxes included in the Patient Protection and Affordable Care Act.
Democrats and supporters of the law countered criticism of the taxes' negative effects by highlighting their need to fund the law's coverage expansions and other popular provisions.
Paul Van de Water, a senior fellow at the liberal Center on Budget and Policy Priorities, countered the claim that the tax on medical devices would send innovation and health technology jobs overseas. “It turns out the tax is carefully structured to avoid that specific effect,” Van de Water said about the exclusion of the tax's application to exported devices.
Among the beneficial impact of the taxes is an expected “downward pressure” on insurance premiums from a coming tax on high-cost plans, said Rep. John Lewis (D-Ga.), ranking member of the panel.