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Governors' Message to Baucus: We Oppose the Device Tax

Governors from California, Indiana, Minnesota, Nevada, and Utah have sent a letter to Senator Baucus (D-MT) stating their strong opposition to the $4 billion tax on the medical device industry in the Senate Finance Committee healthcare reform proposal. The governors argue that such special taxes on the companies are counter to the goals of better healthcare. Click here to download a pdf of the letter. They say the tax could have a negative effect on industry, employees, healthcare providers, and patients.

The tax, as outlined would apply regardless of the size of the company or its profitability, which would have an undue effect on small and mid-sized firms. In addition, the letter states the governors' belief that such a tax would ultimately increase healthcare costs. This is the second such letter sent by leaders of states that have strong ties to medical devices. Earlier this month (September 16, 2009), a letter from Senators of Minnesota and Indiana to Baucus carried a similar message to the one issued today. In related news, the Associated Press released news that Baucus has backed down from a portion of the tax, which had previously included over-the-counter devices, including condoms and tampons. The tax will no longer include exempted consumer items of $100 or less. This last-minute switch means that contact lens solution, maxi-pads, and home pregnancy tests -- among many other items -- will not be taxed. However, items that are not exempt in this back pedal, such as wheelchairs, insulin pumps, and hearing aids, coould still have an effect on patients. AP reports that "The medical devices industry says that eventually, the taxes will get passed on to consumers."

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