Medical device makers mull layoffs after ObamaCare

posted at 2:20 pm on May 6, 2010 by Ed Morrissey

Earlier today, we discovered that companies offering employees health insurance might just be able to do math and discover that they can save money by dumping their benefit plans.  In yet another entry in the Quelle Surprise Department, medical device manufacturers now facing massive taxes and fees from ObamaCare have to start looking for places to save money.  And guess where that will be?

Massachusetts medical-device companies say they’ll cut back on operational costs – and jobs – after a planned 2.3 percent tax on their products is implemented in 2013, according to a new survey.

The Massachusetts Medical Device Industry Council, which held its annual meeting yesterday in Boston, said about 90 percent of the 100 medical-device firms said they would reduce costs due to the new tax tucked into the recently passed health-care reform bill.

But what about all of that new business they’ll get from recently-insured consumers looking to get treatment?  They’re not holding their breath:

About 41 percent of the council’s members said the new health-care bill will help the industry by expanding the number of people getting health-care insurance.

But 42 percent said the new health-care reform bill won’t increase their business, the survey found.

Taxes on companies aren’t ultimately paid by business entities.  They get paid by the consumer in the long run.  In order to save costs, these device manufacturers will either have to lay off employees or cut back on innovative research — and likely both.  The end result will be higher prices, lower support, and less innovation to meet medical needs of consumers.

That’s not the only problem facing the industry, either.  They now have to provide an accounting for their marketing efforts among physicians, thanks to a new “sunshine bill” that requires full disclosure of any marketing directed at physicians.  That will escalate internal costs, putting even more pressure on device makers to cut elsewhere or raise prices, or both.

As we repeatedly warned during the ObamaCare debate, taxes act as a disincentive as well as an inflationary pressure.  What gets taxed becomes less accessible.  Democrats in Congress and the Obama administration apparently felt that we needed less innovation in American medical care, and the whole world will have to pay for it.


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Instead of a pace maker, maybe people should get pain killers and just die. – Obama

lorien1973 on May 6, 2010 at 2:23 PM

if the GOP wants to gain power, all they have to do is say repeal; however, they’re already walking back on repeal.

deidre on May 6, 2010 at 2:24 PM

Every new layoff is a potential vote for conservatives. And the longer they are out of work, the angrier they will be.

trapeze on May 6, 2010 at 2:25 PM

But I was positive Pelosi said this was a “Jobs Bill”???????

search4truth on May 6, 2010 at 2:25 PM

By design.

This is Obama’s America.

Keep voting democrat!

Inanemergencydial on May 6, 2010 at 2:26 PM

obamacare, the gift that keeps on giving….

cmsinaz on May 6, 2010 at 2:28 PM

Leave it to Dems and Obama to not only kill American HS, but to glut the highest growth rate industry in America – medical device makers.. you know – due to our R&D and manufacturing capabilities.

Medtronics, Cardinal Health, Fisher Scientific (now some French subsidiary, dont recall)

But then again, these greedy public companies MUST have been just in it for profits, never mind the millions saved through medical devices./sarc

Odie1941 on May 6, 2010 at 2:28 PM

Oh yeah, “medical devices” include toothbrushes, tampons and practically anything else you find on the health aisles at the grocery store. Walgreens has got to be looking forward to the drop in revenue, too.

trapeze on May 6, 2010 at 2:28 PM

So far every single thing the critics said about obamacare has come true. So apparantly the truth is racist, hate filled and intolerant.

sonofdy on May 6, 2010 at 2:30 PM

Just so you know, AnninCA still advocates for a public option.

myrenovations on May 6, 2010 at 2:30 PM

But I was positive Pelosi said this was a “Jobs Bill”???????

search4truth on May 6, 2010 at 2:25 PM

Turns out it’s a “Jobbed Bill.”

Patrick S on May 6, 2010 at 2:30 PM

Damned doctors just taking out people’s tonsils for $$$$$! – Obama

Good Lt on May 6, 2010 at 2:31 PM

Hey, let’s elect a race-baiting, Marxist, community-organizing, economically-illiterate, Alinsky-trained demagogue President of the United States!

What could go wrong?

AZCoyote on May 6, 2010 at 2:31 PM

Oh yeah, “medical devices” include toothbrushes, tampons and practically anything else you find on the health aisles at the grocery store

No – they’re talking about more advanced devices like defibrillators, pacemakers, ICDs, heart pumps, surgical tools, monitors, etc.

Expensive items that will become even more expensive under ObamaCare – hence, not bending the cost curve down.

Good Lt on May 6, 2010 at 2:32 PM

They now have to provide an accounting for their marketing efforts among physicians, thanks to a new “sunshine bill” that requires full disclosure of any marketing directed at physicians.

Yeah, the only thing we don’t have is government in the sunshine. Would been nice if some–heck, any– of the provisions of the health care law had been discussed in public forums and with input from the public and Republicans.

obladioblada on May 6, 2010 at 2:34 PM

Just so you know, AnninCA still advocates for a public option.

myrenovations on May 6, 2010 at 2:30 PM

LOL!

search4truth on May 6, 2010 at 2:34 PM

OT: what’s going on today?
bomb thread on a greyhound bus in NH, major riots in Greece

cmsinaz on May 6, 2010 at 2:34 PM

Obama lied the medical device industry died.

jukin on May 6, 2010 at 2:36 PM

Oh yeah, “medical devices” include toothbrushes, tampons and practically anything else you find on the health aisles at the grocery store

How about something used constantly? Needles for injection? Imagine that .50 cent syringe now cost 10 bucks per shot for insulin.

ouch.

upinak on May 6, 2010 at 2:40 PM

major riots in Greece

cmsinaz on May 6, 2010 at 2:34 PM

**Sings**

It’s the End of the World as we know it… and I feeel fiiiiiinneeee!

upinak on May 6, 2010 at 2:41 PM

OT: what’s going on today?
bomb thread on a greyhound bus in NH, major riots in Greece

cmsinaz on May 6, 2010 at 2:34 PM

And the stock market is in free fall.

Knucklehead on May 6, 2010 at 2:44 PM

Those jobs weren’t on the list of those to be saved or created, apparently.

Vashta.Nerada on May 6, 2010 at 2:44 PM

But, but, but, but…..who is going to take out my tonsils? Will the newest invention be rope and a door knob?

Dr.Cwac.Cwac on May 6, 2010 at 2:48 PM

What makes this even more special for me is the large number of med device makers here in Minnesota. I have close friends and associates who work for these companies, and they have been holding their breath about potential layoffs for months now.

Bishop on May 6, 2010 at 2:48 PM

And the stock market is in free fall.

Knucklehead on May 6, 2010 at 2:44 PM

slip sliding away….

We all knew this was going to happen. That is what is most sad.

upinak on May 6, 2010 at 2:51 PM

Won’t it be cool when advanced medical devices are produced in some rural factory in Bangladesh?

So your heart stent has a few burrs on it, no big deal.

Bishop on May 6, 2010 at 2:56 PM

bomb thread on a greyhound bus in NH, major riots in Greece

cmsinaz on May 6, 2010 at 2:34 PM

I’m in NH, it’s still ongoing. Local hotel evacuated now.

One man remains on the bus at this time, all other passengers (16) and the driver are no longer on the bus.

BTW, the only “bomb thread” is the one on the Muslim T shirt vendor in Headlines. A couple of our Leftists have really been stinking up the joint in the comments.

Del Dolemonte on May 6, 2010 at 2:57 PM

With medical care you have two choices: you can treat the situation like triage in which the authorities decide who gets a twindling supply and you better pray that you’re in good standing with the chief surgeon because you ain’t getting any more supplies, beds, medical equipment, or doctors to treat you.

The other way to treat it like a free market in which you cope with shortages by growing the market through profit incentives.

Obama opted to go with managed decline.

PackerBronco on May 6, 2010 at 2:57 PM

Obama the Destroyer.

Locusts, plaque and pestilence have nothing on Obama.

MB4 on May 6, 2010 at 3:05 PM

Well done Dems for wrecking the job market in an industry that does nothing except help people live better.

WisCon on May 6, 2010 at 3:07 PM

I have close friends and associates who work for these companies, and they have been holding their breath about potential layoffs for months now.

My husband just got his pink slip and it doesn’t matter about seniority. He had 17 years in and bye-bye.

Beaglemom on May 6, 2010 at 3:07 PM

Beaglemom on May 6, 2010 at 3:07 PM

Then it’s curtains for my friends too. Joy.

Bishop on May 6, 2010 at 3:15 PM

Somehow saying “I told you so” doesn’t make me feel any better. So depressing…

Dee2008 on May 6, 2010 at 3:17 PM

This legislation will impose taxes and regulations that can only be described as punishing. America leads the world in medical technology, but those scientists and investors who have built these industries will before long start doing something else with their talent and money. It won’t happen overnight, but I guarantee that if this legislation is not repealed, within ten years our hospitals and clinics will be buying devices from China and Israel. And we’ll all wonder why another great American industry vanished.

rockmom on May 6, 2010 at 3:20 PM

Obama Pelosi and Reid continue to drive a stake through the heart of all things health care related.

Fletch54 on May 6, 2010 at 3:22 PM

Well done Dems for wrecking the job market in an industry that does nothing except help people live better.

WisCon on May 6, 2010 at 3:07 PM

“Adults in charge now”.

Update on the NH bus story…the 16 passengers and driver exited the bus 1 by 1 with their hands in the air, and walked 1 by 1 down the center of the street. This was about 90 minutes ago. One passenger still on the bus.

Authorities are currently monitoring the air quality around the bus for bio or nuclear “signature smells”.

Del Dolemonte on May 6, 2010 at 3:23 PM

I have been doing consulting work for MedTronic for over ten years. In January 2009 I got a notice saying that they were canceling or putting on hold all new projects. My contacts, tell me that it was the uncertainty of what Obama and Pelosi would do on health care. I regularly check in and it looked like one of the new projects was going to get funded in late January. That project was put on indefinite hold after HellCare passed. The whole industry is hunkering down, moving operations offshore, and minimizing their exposure to domestic forces.

jukin on May 6, 2010 at 3:23 PM

How about something used constantly? Needles for injection? Imagine that .50 cent syringe now cost 10 bucks per shot for insulin.

ouch.

upinak on May 6, 2010 at 2:40 PM

Democrats hate people with diabetes.

rockmom on May 6, 2010 at 3:23 PM

You can save money not washing instruments between cases.

seven on May 6, 2010 at 3:23 PM

If you break your leg, limp on down to HD and buy a couple of boards and some screw. Look at it this way, you will still be better off than average Kenyans.

Or you could just swim to Cuba.

tarpon on May 6, 2010 at 3:24 PM

Stock market going to Hell in a Handbasket today.

MB4 on May 6, 2010 at 3:26 PM

I’m currently interviewing for a position with a medical insurance company. I’m not sure I see much of a long term future there, but since I’ve been out of work since last June if they make an offer I’ll take it and ride it all the way to the ground.”

“The power to tax is the power to destroy.”

Stephen Macklin on May 6, 2010 at 3:27 PM

Summary.

1 Several hundred thousand jobs cut because of insurance coverage mandates for employers.
2 couple hundred thousand jobs cut because of taxing devvice and product makers and sending manufacturing overseas
3 Several hundred thousand jobs lost by reason of cutting pay to caregivers, docs hospitals etc

Nancy Pelosi said signing Obamascare would add 400,000 jobs to our economy almost immediately.

Looks like the 400,000 may have been correct. Jobs cut and not gained.

seven on May 6, 2010 at 3:30 PM

But I was positive Pelosi said this was a “Jobs Bill”???????

search4truth on May 6, 2010 at 2:25 PM

Yeah, she didn’t explain it was a “Screw Jobs Bill”. Slight omission by the harridan of the house.

Aviator on May 6, 2010 at 3:33 PM

As we repeatedly warned during the ObamaCare debate, taxes act as a disincentive as well as an inflationary pressure.

Man! As if your warnings did a bit of good! We here hotair commenters knew Obummer was bad news from the start. How bad? Even worse than I thought at least. And I thought Bummer very very bad.

So your ahem warning was correct. So what?

What do your words (or my words or all of those bestseller and excellent conservative books` words) do to change anything?

The only people reading this stuff is us. The people who need to read it is them. But them ain`t reading (anything much in general) what they need to read.

All words and no deeds.

Words words words. Good words, but words.

It is indeed a sad sad situation and it`s getting more and more absurd. So sorry, so sorry . . . .

America was the greatest. Still is. But heading down hill like a powered skateboard on nitro, thanks to the libs and El Bama.

Sherman1864 on May 6, 2010 at 3:34 PM

Fine print — The Medical Device industry is likely to start moving their jobs and manufacturing out of the US, if not also their R&D. There’s lots of global competition opening up on many medical device fronts — like from China.

It would seem a significant WTO/NAFTA problem for US to put tariffs on imported devices to make up for the new tax on native companies.

But then what can you expect when you’ve got a group that couldn’t even run a profitable kid’s corner lemonade stand running the White House and Congress?

drfredc on May 6, 2010 at 3:52 PM

Most big pharmaceutical companies have a prescription discount program for those who need assistance buying their medications. Since Obamacare passed, my daughter’s employer is closing down their program and laying off 3,000. I assume other co’s will too.

GrannySunni on May 6, 2010 at 4:05 PM

And as I heard on Rush awhile back, a toothbrush could be considered a medical device.

JellyToast on May 6, 2010 at 4:11 PM

The real price will be lives shortened.

The net effect of Obamacare will be a shift of lifespan from people who work to people who don’t.

notagool on May 6, 2010 at 4:48 PM

Rove on Greta last PM had a short but worthwhile(to me at least)list of things we might do to recover from some of our economic problems. But in obama’s case, none so deaf as those who will not hear. What’s to be done here? He’s simply unable to do his job on any level and only a handful of folks in and around DC have the courage to say so.

jeanie on May 6, 2010 at 5:08 PM

Oh yeah, “medical devices” include toothbrushes, tampons and practically anything else you find on the health aisles at the grocery store

No – they’re talking about more advanced devices like defibrillators, pacemakers, ICDs, heart pumps, surgical tools, monitors, etc.

Expensive items that will become even more expensive under ObamaCare – hence, not bending the cost curve down.

Good Lt on May 6, 2010 at 2:32 PM

It is fortunate for us that the medical device manufacturers will just eat the tax increase and not pass it on to the customer. /sarc

The Democrats for some reason think that new taxes have no consequences other than increased tax revenue.

Dasher on May 6, 2010 at 5:49 PM

Rove on Greta last PM had a short but worthwhile(to me at least)list of things we might do to recover from some of our economic problems. But in obama’s case, none so deaf as those who will not hear. What’s to be done here? He’s simply unable to do his job on any level and only a handful of folks in and around DC have the courage to say so.

jeanie on May 6, 2010 at 5:08 PM

Obama is totally surrounded by a$$ kissers, from his advisers to the media. No wonder we are in such deep do do.

Dasher on May 6, 2010 at 5:51 PM

imagine that .50 cent syringe now cost 10 bucks per shot for insulin.

Well, that’s OK. You don’t understand that by killing off those us with diabetes, the rest of you will be healthier and better able to support the anointed class.

oldleprechaun on May 6, 2010 at 7:40 PM

That’s not the only problem facing the industry, either. They now have to provide an accounting for their marketing efforts among physicians, thanks to a new “sunshine bill” that requires full disclosure of any marketing directed at physicians. That will escalate internal costs

As will the ObamaCare requirement that will explode the issuance of 1099s.

Paul_in_NJ on May 6, 2010 at 10:40 PM