Boston Herald Editorial: A Devastating Tax

By the Boston Herald Staff

Of all the many flaws in Obamacare, the medical device tax, the most destructive, would also be the easiest to fix.

The 2.3 percent tax was always among the most controversial elements of the Affordable Care Act and even this state’s irretrievably liberal Democratic delegation opposed it pretty much from the start. But when it came to doing the right thing by their party or their state and its industries — well, we all know where they ended up.

So now we in Massachusetts are paying the price for their misplaced loyalty. But the biggest price is being paid by those companies and the dwindling workforce.

At first the accounts of the law’s impact were anecdotal. The Herald found Ronald Adams, laid off from his job as senior director of research and development for Hologic, who reports he’s got lots of company from former associates out there on the unemployment lines.

Some 25,000 people are — or were — employed by the medical device industry in this state.

Tom Somers, head of the Massachusetts Medical Device Industry Council, told the Herald, “I haven’t seen job growth at all in the last year or so.”

The Legislature as part of the fiscal 2015 budget created a commission to study the impact of the medical device tax and put some real numbers behind the general impression that it was already having a devastating impact on an important economic generator. The commission is also charged with evaluating whether the state should use its own tax policy to offset the negative impact of the Obama-care tax since Congress hasn’t exactly knocked itself out trying to repeal that provision.

A Pioneer Institute study of the 19 largest medical device companies in the state found that the tax will cost them an estimated $400 million a year. Now that’s one hefty hunk of change in the event Massachusetts wants to “correct” this flaw in federal policy. And that doesn’t include the smaller, startup companies where so much of the action is these days.

The alternative for those firms? Cut research and development, thus depriving the entire nation of the possible next “big thing” in health care, or cut their work force. Both ugly choices.

Congress could, of course, solve the problem — if there is the political will to do so, an increasingly dubious proposition.