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Medical devices such as this prosthetic hip joint would be subject to the tax. Photo: <a href=" http://www.flickr.com/photos/24638567@N00/2909406987/">DanR</a>, Creative Commons, some rights reserved
Medical devices such as this prosthetic hip joint would be subject to the tax. Photo: DanR, Creative Commons, some rights reserved

Medical device tax draws GOP fire in shutdown battle

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As the stalemate in Congress enters its second week, the Affordable Care Act remains at the center of the budget debate.

One of the key demands from Republicans is that part of the Act- a 2.3% medical devices tax designed to help fund health care reform - is removed.

The medical device industry claims the tax would stifle innovation and result in job losses.

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John Eckberg from Cook Group, a global player in the field, spoke to medical device companies from across the state last night at a conference in Rochester.

He says small companies will be hit the hardest, some possibly eliminated completely.

“A 2.3 percent tax for companies that measures net in billions of dollars, $3 billion, it’s a haircut. But for a small company with low profit margins, it’s a scalping, it’s not a haircut.”

Eckberg said if the medical devices tax stands, it’s likely to stifle innovation and result in job losses.

“For the industry it takes a $50,000 a year job off the balance sheet, that pays $33,000 in benefits, every 20 minutes. It’s an amazing drain on an otherwise innovative industry and it’s just going to chase companies off-shore because they need to do something about lowering taxes.”

Supporters of the tax say industry estimates of costs and job losses simply don’t add up.

They argue that the influx of around 30 million new health care consumers expected when the Affordable Care Act kicks in will help to offset the tax for companies in the medical device sector.

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