EDITORIAL: Medical device tax unnecessary, unhealthy, harmful

OPINION:

Dreaming up innovative products that make living easier and even save lives requires creating something unimagined out of vision and thin air. That’s why President Obama’s tax on medical devices has never made sense. It steals the seed corn that talented scientists and engineers need to fund their ideas, and it hobbles efforts to build a healthier and more productive nation. The medical device tax is a drag on progress, and even some “progressives” understand that.

Fortunately, Congress has taken a step to fix it. The Republican-led House voted last month 280 to 140, with the help of 46 Democrats, to repeal the 2.3 percent medical device tax, which lurched to life as part of the 2010 Affordable Care Act. Chief Justice John Roberts and the Supreme Court saved the president’s Obamacare scheme with a little artful abuse of the language, but that shouldn’t deter the Senate from joining the lower chamber in putting this piece of Obamacare where the president’s veto pen can’t save it.

Medical devices are some of the miracles of modern medicine — MRIs and other imaging machinery, heart pacemakers and stents, replacement joints for the aging hips and knees and prosthetic limbs for America’s wounded warriors. Companies that make these devices require the services of top-notch biomedical engineers and cutting-edge materials, none of which are inexpensive. The Food and Drug Administration has proposed that information technology, such as apps, that receive, transmit, store or display data from medical devices be exempt from the tax. It’s a nice gesture, but it’s not enough.

The medical device tax takes its bite out of gross sales, not profits, so not even a company operating in the red is spared. That’s how little this White House understands about how the world works. The Congressional Research Service calculated last year that the effect of the tax on the medical device industry would be minimal, with the tax expected to raise a mere $29 billion over 10 years. Only bureaucrats who count cash by the truckload would think that’s anything “mere.”

The tax has killed 14,000 existing industry jobs nationwide and unless repealed will prevent companies from creating 19,000 new jobs, according to the Advanced Medical Technology Association.

Here’s a figure that no one would mistake for something “mere”: $576 billion. That’s the annual cost to the U.S. economy of lost productivity due to illness, as calculated by the Integrated Benefits Institute in a 2012 study. The nation suffers from a dearth of productive workers owing to the effects of Obamanomics. The Bureau of Labor Statistics reported last week that the labor force participation has fallen to 62.6 percent of the working-age population, a 38-year-low, and 93.6 million Americans 16 years of age or older are not working.

Some people aren’t working because they don’t want to, but others because they’re unhealthy. If taxing something is the best way to make it disappear, as the president’s Economics 101 instructs, why is Mr. Obama determined to tax the stuff that makes Americans healthy and productive? If the president is genuinely concerned about a revenue shortfall were the medical device tax lifted, he could lean on the Internal Revenue Service to quit sending out tax refunds to fraudulent filers. That scam alone costs the Treasury about $6 billion a year.

The medical device tax makes a mockery of Mr. Obama’s claim to solicitude for the halt and the lame. It’s one destructive part of Obamacare that Congress could strike down without the help of the Supreme Court.