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Evan Bayh Offers Straight Talk on Obamacare

Posted by Steve Markowitz on October 2, 2012

Evan Bayh is becoming an endangered species in the Democratic Party.  Bayh is a Democrat in the tradition of Truman, Kennedy and Humphrey.  30 years ago this reality, Bayh’s intelligence and his good looks, would have made him a leader in the Party.  While once a rising star and US Senator from Indiana, Bayh has left politics frustrated at where the Country and his Party are heading.

While Bayh is no longer on the national political scene, he continues to share concerns about the Country’s direction.  This past weekend Bayh published an op-ed in the Wall Street Journal with a concern about one of the provisions in Obamacare.  Bayh contends that the Affordable Care Act, often referred to as Obamacare, will seriously impact a critical industry in the United States, medical devices.  Bayh makes the following conclusions:

  • One Obamacare provision is a 2.3% tax charged to manufacturers on the sale of medical devices such as defibrillators, pacemakers, artificial joints, stents and other devices.  This will lead to an additional 15% tax on these companies’ profits and when added to the federal and state corporate tax rates, will mean an overall tax rate in excess of 50%.
  • The medical devices industry directly employs over 400,000 in United States, with another 2 million jobs dependent on this industry.  The average compensation in the industry for directly employees is over $58,000, almost $17,000 more than the national average for the United States.  In addition, the industry has an annual net positive exports in excess of $5 billion.
  • This new tax on producers of medical devices will negatively impact these companies global competitiveness and result in American job losses.  As example, stethoscope manufacturer Welch Allyn announced a 10% reduction in its global workforce, with all of these cuts occurring in the United States.  Bayh offers other examples.

The economic impact on the medical devices industry is an unintended consequence of Obamacare.  Any time the government intervenes in a market it does so with the naïve belief that it can control a significant number of complex variables.  Time and time again this has proven to be fallacious.  But that does not stop the government from ever more frequent interventions.

The economic impact on  the medical devices is but one of the problems in this area.  As these manufacturers profits decrease, so too will their spending on research and development.  This will negatively impact future advances in this important area of medicine hurting patients well-being.

Bayh points out that Congress attempted to correct this part of Obamacare, voting 253, including 37 Democrat legislators to  repeal the tax.  However, not one Democrat in the Senate supports it killing the effort.

Obamacare is just beginning to be implemented and the negative impacts are already significant.  This is but the beginning of what will likely go down in history as one of the largest governmental boondoggles of all time.  Curiously, President Obama touts it as the greatest achievement of his first term in office.  Sort of matches the decision for the President to receive the Noble Price for Peace within weeks of his inauguration.


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