Connecticut’s medical devices industry could benefit from the change in control in Washington next year as Republicans vow to repeal a tax that was put on device makers almost two years ago.
Republicans, who will soon control the U.S. Senate, are still gunning for Obamacare.
While their prospects of repealing or de-funding the entire law are remote, they have pledged action on specific measures. One of the first to be tackled could be the 2.3 percent tax on medical devices. That went into effect at the beginning of 2013, as a source of funding for the additional costs associated with the Affordable Care Act.
The effect has been palpable. “It basically costs us one employee a year,” said Steve Whitney of Linemaster Switch, a company based in Woodstock that employs 150 people. “We pay a tax -- $30,000 to $40,000 a year, depending on how many of these devices that we pay -- and there’s then the cost of tracking it and making deposits, and filing tax returns, and things like that. There’s been a real cost to us as a small company.”
Linemaster Switch makes hand and foot controls, many of which end up on devices such as medical lasers and operating room beds.
Whitney said that in addition to the basic cost of the tax, he’s also seen a slowdown in research and development in the industry as a result of the tax. "We found several of the projects that some of the larger companies that we sell to — they’ve been put on hold, especially when the tax first came about....everything just slowed down in the medical device industry," he said.
Whitney said that now, many medical device makers are finally figuring out how to pass on the cost of the tax to the end user, and things have stabilized. But he and many of the 150 or so device makers in the Nutmeg State would be delighted to see it go away. The industry employs about 7,000 people in Connecticut, and has an output of over $2 billion in sales, according to its trade group, Beacon.
Some non-partisan studies have challenged industry claims about the effect on jobs and growth, saying the dire effects projected by lobbying groups have failed to materialize. But the tax itself is unpopular among both Democratic and Republican lawmakers who’ve been lobbied by device makers in their districts.