How Obama/Biden Wrecked the U.S. Medical Device Industry

As lawmakers ponder ways to bring back U.S. manufacturing of pharmaceuticals, their raw materials, medical supplies, and devices, it must be remembered a major part of this problem which has come back to bite us was created by the Obama/Biden administration and the medical device tax that was included in ObamaCare that was supposed to defray the costs of this doomed-to-failure new entitlement program.

As part of the Orwellian-named Affordable Care Act, sales of medical devices from implants to MRIs, research equipment and surgical instruments were to bear a 2.3 percent tax. The tax would be on gross sales and not just profits. Even packaging, shipping, and warranties were included when calculating what was to be taxed.

Because the Affordable Care Act was so unaffordable, it needed a running head start on revenue with imposition of the new tax beginning on January 1, 2013, while ObamaCare itself would begin a rolling implementation in 2014 with its more harmful aspects and the revelations that, no, you couldn’t keep your doctor or your plan even if you liked them. We would have to wait to find out that premiums would skyrocket, not decrease $2,500 as promised in another Obama/Biden lie, and deductibles would be so high that many of those with insurance couldn’t use it. Taxes first, questions later.

Health care equipment manufacturers were not amused and there were predictions that this onerous tax on medical devices would for makers overseas and into the welcoming arms of China. As Bill Flax wrote in Forbes in October 2012:

Cook Medical, America’s largest privately-owned medical device manufacturer has been adamant that shrinking margins may force investment overseas. “Cook will no longer be able to expand our manufacturing in the United States,” said company spokeswoman Allison Giles. “We’ve always resisted going abroad” but due to diminished returns “decisions will have to be made.”    

Cook scuttled plans for five additional plants across the Midwest. It expects the device tax could cost $30 million annually, roughly equivalent to constructing its new Canton, IL factory. Says the company, “that’s one less facility per year that we’re going to be able to use because of the tax.”

Apart from forcing companies to cancel expansion plans and/or move overseas, one immediate effect of the medical device tax was to destroy jobs in an industry belatedly considered as part of our national security in an age of China-spawned pandemics. It was put on hiatus in December 2015 due to its disastrous effects on the medical device industry. It was scheduled to return at the end of 2019 until  President Trump killed it, forcing it to be included in a  federal spending package that he signed into law last December. As the U.S. Chamber of Commerce noted in February 2017:

From 2012 to 2015 the number of medtech jobs fell by almost 29,000. The decline started in 2012 when companies were preparing for the medical device tax to go into effect and then accelerated in 2013 and 2014.

A report and white paper from Roth Capital warned of the calamitous impact the device tax would have on the medical device industry, healthcare providers, and patients:

Roth also surveyed companies on their latest plans to manage through the implementation of the Medical Device tax next year.  The report determined that (1) over 80% would either cut jobs or forego new hires and (2) more than 75% would either cut or forego new R&D projects as a result of the tax.  The report also found that 85% of companies would be expanding overseas.  

Even when it was in hiatus, the Obama/Biden medical device tax hung over the medical device industry like the proverbial sword of Damocles. Outsourcing didn’t seem such a bad thing As Rush Limbaugh has noted, liberal progressives like Obama and Biden employ a static analysis that says you can raise taxes and human and corporate behavior won’t change:

Do you all remember this thing called Obamacare? I’m sure you do. Do you remember the medical device tax that Obamacare instituted? Like all liberals, Obama believed that people that make things will pay anything. You put a tax on ’em, they’ll just keep paying the tax and they’ll just keep making the device. You put a tax on yachts, and people will pay the tax…

Well, guess what? The people that manufacture medical devices fled the USA, and they went overseas to various places to get ’em made. One of the places they went was China. They also went to Mexico. They went to places in Europe. And now people complain about a shortage. They want to chalk it up to somehow a fault or a deficiency of capitalism or of the United States. No siree, Bob. It was a by-product of a tax increase called Obamacare on medical devices.

Let us also not forget that during the H1N1 swine flu pandemic during which no foreign travel was suspended and a national emergency wasn’t declared until six months in, Democrats blame shortages of things like face masks and ventilators on Trump’s alleged ineptitude. Let’s roll the tape

But the reason we don’t have the respirator masks goes back to the Obama/Biden administration when they were advised to replenish the stockpile that had been used during the H1N1 swine flu pandemic.

But it never happened, they never did it, according to the Washington Examiner:

The George W. Bush administration published the National Strategy for Pandemic Influenza plan in 2005, which called on the federal government to distribute medical supplies from the Strategic National Stockpile governed by the Health and Human Services Department in the event of an outbreak,

In 2009, the H1N1 outbreak hit the United States, leading to 274,304 hospitalizations, 12,469 deaths, and a depletion of N95 respirator masks.

A federally backed task force and a safety equipment organization both recommended to the Obama administration that the stockpile be replenished with the 100 million masks used after the H1N1 outbreak.

Charles Johnson, president of the International Safety Equipment Association, said that advice was never heeded.

“Our association is unaware of any major effort to restore the stockpile to cover that drawdown,” he said.

We need to remember the Obama?Biden days of swine and poses.

Daniel John Sobieski is a former editorial writer for Investor’s Business Daily and freelance writer whose pieces have appeared in Human Events, Reason Magazine, and the Chicago Sun-Times among other publications.               

If you experience technical problems, please write to