Research Briefing

Small Businesses, Doctors Continue To Brace For Costs Of

Obama’s Government Takeover Of Health Care

LOCAL SMALL BUSINESSES TAKE STOCK OF THE JOBS THEY’LL HAVE TO CUT

CEO Of Cleveland’s Invocare Says Medical Device Tax Is Like “Throwing A Hand Grenade” Into Health Care Industry. “The law includes a 2.3% excise tax on the sale of all medical devices except for consumer goods, such as contact lenses and hearing aids. . .Among established medical device companies, Invacare Corp. of Elyria, the world's largest wheelchair maker, has been a vocal opponent of the tax. Invacare CEO A. Malachi Mixon III in a January interview with Crain's went so far as to say the tax was the equivalent of ‘throwing a hand grenade in the middle of the health care economy.’” (Chuck Soder, “Tax On Medical Device Manufactuers Could Be Taxing,” Crain’s Cleveland Business, 3/29/10)

• MassDevice.com’s Brad Perriello Said The Medical Device Tax Will Cause More Pain For “Mid-Sized And Smaller Companies,” Pushing Some “From Black To Red.” “I think the real impact is going to be on the mid-sized and smaller companies, where profit margins are a lot more narrow, and in some cases are so narrow that the effect of the tax will push a small minority of the companies from black to red…” (Annie Baxter, “Excise Tax Has Local Medical Device Makers Concerned,” Minnesota Public Radio, 3/29/10)
• LifeScience Alley CEO Don Gerhardt: “Minnesota Is Going To Take About 25 Percent Of The Hit On The Total Tax Levied Against The Medical Technology Industry …” (Annie Baxter, “Excise Tax Has Local Medical Device Makers Concerned,” Minnesota Public Radio, 3/29/10)
• Virginia Owner Of Medical Supply Distributor Says Medical Device Tax Will Be Passed On To Him, Eventually Costing Industry Jobs. “The health-care reform bill signed by President Obama last week brings with it new excise taxes on the medical device and pharmaceutical industries. … Wayne Sale, the owner of a Henrico-based medical supply distributor Health First who heads up a national trade group that opposes the tax, says he expects manufacturers to pass the cost to him. ‘It directly affects me because my manufacturers have to take it on to the bottom line,’ said Sale. ‘Now they will sell me what they sell for $25 for $28 to make up the difference.’ … Sale thinks the tax will eventually cost his industry jobs. He does not expect an increase in customers who qualify for Medicare and Medicaid to offset increased costs created by the tax.” (Al Harris, “Health-Care Reform Brings New Taxes,”  Richmond BizSense, 3/29/10)

Sallie Mae “Expects To Cut About One-Third Of Its 8,500 Employees Nationwide,” Including Jobs In Indiana. “The legislation, which was coupled with health-care reform, prevents Sallie Mae from originating student loans, so the company expects to cut about one-third of its 8,500 employees nationwide. Nearly 1,700 work at the Fishers branch, which is the company's largest, and more than 700 work in Muncie. Sallie Mae's next step is to decide which offices to close… Kroehler said the Fishers office will have employee meetings this week to discuss what could happen next.” (Carrie Ritchie, “Reform Of Student Loans Hits Sallie Mae,” The Indianapolis Star, 3/29/10)

Owner Of A Tanning Salon In Pennsylvania Says 10% Tanning Tax “Will Hurt” And Cost “Jobs And Tax Revenue.”  “Ronda D'Angelo, the owner of Electric Tan in Harrisburg, said she's getting burned by the new tax. As part of the new health care law, tanning salons will be hit by a 10% tax on all indoor tanning sessions come summertime. ‘This will cost our community and other communities jobs and tax revenue. In a weak economy this large tax will hurt,’ D'Angelo said.” (“Tanning Salon Owners Steamed Over New Tax,” WHTM-TV (ABC), 3/28/10)

• “Unfair” Tax On Tanning Salons In Nebraska Has Some Considering Whether To Close Their Doors And Cut Their Losses. “The recent health care reform bill was meant to help the less fortunate. Some small businesses feel they are being ignored. One clause in the bill institutes a ten percent tax hike for indoor tanning services. It is to help pay for the health risks associated with tanning. Multiple salons in the Hastings area said they feel threatened. Paradise Tanning said they already felt a decrease in business due to the economy. The owner said they will have to reduce employees or worse. ‘It is just unfair to keep passing on more and more cost to our customers. There comes a time where you have to decide whether you should just close your door and cut your losses,’ said Nancy Bumgardner, Paradise Tanning.”  (“New Tax Weighs Heavy On Tanning Salons,” KHAS, 3/29/10)
• Tanning Salon Owner In Wisconsin Says She May Have To Lay Off People As Result Of Tanning Tax. “Starting July 1, tanning salons will be required to slap a 10 percent tax on all ultra-violet tanning. At Bella Sole Tan, 2719 18th St., that’s going to hurt. ‘It could impact us in a lot of ways,’ says co-owner Travis Halvorsen. ‘Ninety-nine percent of our clients do UV tanning. We might lose clients. We might cut back on people’s hours. We might even have to lay people off.’” (Melinda Tichelaar, “Tanning Tax Clouds Horizons For Salons,” Kenosha News, 3/27/10)

AND DOCTORS WARNING PATIENTS ABOUT HOW OBAMA’S BILL WILL HURT THEIR PRACTICES

Obama’s Bill Will Result In Longer Lines, Shorter Visits With Physicians In South Carolina. “The landmark health care bill signed into law by President Barack Obama will eventually mean 32 million more insured Americans, but adding so many more patients could lead to longer waits to see a physician and less time for the visit because there is a doctor shortage now. … It’s estimated the country needs 30 percent more doctors to address the projected shortfall of 125,000 physicians by 2025.” (Liv Osby, “Doctor Shortage Will Grow As More Qualify For Care,” The State, 3/29/10)

• Dr. Robert McDonald, Spartanburg Regional Healthcare System: “[W]e’re Very Concerned About The Shortage As It Is Now And How It Will Worsen Over The Next Few Years...” (Liv Osby, “Doctor Shortage Will Grow As More Qualify For Care,” The State, 3/29/10)
• President Of The South Carolina Medical Association Fears There Won’t Be Enough Doctors, Says “It’s A Crisis.” “Dr. John G. Black, an internist and president of the South Carolina Medical Association, said physicians worry that the nation isn’t prepared. … ‘Most of us really feel like there’s not going to be enough physicians to take care of these people’ … ‘It’s a crisis,’ he said.” (Liv Osby, “Doctor Shortage Will Grow As More Qualify For Care,” The State, 3/29/10)

Medicare Cuts Are “Troublesome” For Michigan Hospitals Near Areas Largely Populated By Senior Citizens. “At the same time, the legislation calls for cuts in Medicare payments to hospitals. And that's troublesome for some Metro Detroit health systems that have hospitals in areas with large senior populations. At Beaumont Hospitals, for instance, about 45 percent of its patients are on Medicare, said Mike Killian, the system's vice president of marketing.” (Christina Rogers, “State Providers Brace For Health Care Changes,” The Detroit News, 3/27/10)