Despite the 2.3 percent medical device excise tax used to fund the Patient Protection and Affordable Care Act, orthopedic device companies in Warsaw, Ind., are still hiring, according to a NewsOK report.
Republican lawmakers — and some Democrats — have been touting the device excise tax as a "job killer" and calling for its repeal for the past few years. Now with a Republican majority in the House and Senate, swift action could lead to repeal.
However, this new report shows device companies are hiring despite the tax and continue to bring revenues into their home states. Here are seven key points from the article:
1. Republicans are making the excise tax repeal a top priority with help from Democrats in states with a high concentration of device makers. President Barack Obama would veto the repeal, as it would de-fund his cornerstone legislation, and it's unclear whether the House and Senate would have the two-thirds majority to overturn the veto.
2. The tax is expected to bring in $29 billion over the next 10 years to expand healthcare coverage.
3. In addition to the tax, device companies are seeing price pressure from hospitals to lower costs of their devices and implants. Companies offset the negative impact of the tax and price pressures through layoffs and restructuring.
4. After the excise tax went into effect in 2013, many companies reported flat revenues. There were slow and flat revenue growth in 2014 as well, prompting companies to acquire smaller or mid-sized companies for growth.
5. Despite the consolidation and layoffs, there are still students coming out of college who get job offers before their coursework is complete. Unemployment in the counties surrounding Warsaw is 1 percentage point lower than the national average.
6. Wall Street is also optimistic about the medical device industry, especially orthopedics, with share prices growing faster than S&P 500 through the first half of 2014. Share prices for orthopedic companies were up 29 percent.
7. Overall, an AdvaMed report shows the tax was directly related to 14,000 job cuts and around 19,000 "speculative" job cuts.