Research Briefing

As Biden Visits Minnesota, Will He Explain Why Dems’ Government-Run Health Care Experiment Will Threaten Tens Of Thousands Of High-Paying Minnesotans’ Jobs?

IF YOU THINK IT’S COSTLY FOR MINNESOTANS TO SHAKE HANDS WITH BIDEN TODAY: “Biden will raise money for the Democratic National Committee and President Barack Obama’s political organization on Oct. 15 in Edina. The minimum entry fee is a donation of $7,600 per person or $15,200 per couple …” (“Biden To Hold Fundraiser In Minnesota Next Week,” The Associated Press, 10/6/09)

HERE’S HOW COSTLY BIDEN’S HEALTH CARE EXPERIMENT WILL BE FOR MINNESOTA’S MEDICAL INNOVATION INDUSTRY

Senate Finance Dems’ Version Of Obama-Biden Health Care Experiment Raises $38 Billion In New Taxes On Medical Device Manufacturers. “Impose annual fee on manufacturers and importers of certain medical devices … 38.6 [billion].” (“Estimated Revenue Effects Of The Revenue Provisions Contained In Title VI Of The ‘America’s Healthy Future Act Of 2009,’” Joint Committee On Taxation, 10/8/09)

That Could Threaten 60,000 Minnesotans Employed In Medical Device Industry. “Rochester Medical is a 20-year-old medical device maker in Stewartville. Among other things, they make catheters. ‘We make devices so you don't have to wear diapers, basically is what we do,’ Says CEO Jim Conway … But he says a new multi billion dollar tax on companies like Rochester Medical could change that … Meaning jobs, like the one Sunny Jones has that pays around 13-dollars an hour, could instead go to a worker in Mexico. … Jones’ job is just one of 60,000 medical device jobs in Minnesota ...” (Donny Rowles, “Possible Taxes On Medical Devices,” KAAL-TV, 9/16/09)

That’s Why Minnesota’s Democrat Senators Oppose Tax On Medical Device Industry. “Twenty House members from California … signed a letter asking the Senate Finance Committee to reconsider the tax. Senators from Minnesota and Indiana — three Democrats and one Republican, in all — sent a similar letter. ‘Minnesota, like many states, has lots of people employed in the medical device industry,’ Sen. Amy Klobuchar, D-Minn., whose state is home to Medtronic, one of the nation’s largest device manufacturers, said in an interview. ‘I want to keep jobs in my state.’” (John Fritze, “Medical Device Makers Press Senate On Tax,” USA Today, 10/2/09)

Businesses Would Be Crushed Because Tax Exceeds Annual Amount Of Venture Capital Invested In “Life-Saving Medical Treatments.” “In view of these changes, the proposed $40 billion tax on the medical device industry is particularly onerous. Such a tax will sharply cut the resources available for research and development of life-saving medical treatments. For context, consider that the majority of device companies combined spent a total of about $9.6 billion on research and development in 2007. This new tax is nearly half that amount. The tax also exceeds the total amount of venture capital dollars invested in device companies in 2007 ($3.7B) and on an annual basis, is four times what device companies raised in 2007 for IPOs ($1B).” (Advanced Medical Technology Association, “AdvaMed Statement on Chairman’s Mark,” Press Release, 9/16/09)

Which Would “Jeopardize Thousands Of High-Paying” Jobs In Medical Research And Development. “The proposed tax would have a significant and unfair impact on our industry, a worldwide leader in biomedical innovation ... Such a rate would dramatically increase our overall effective tax rate, and, in turn constrain resources used for research and development and investment in physical manufacturing capacity. In short, the tax would jeopardize thousands of high-paying scientific and engineering jobs, precisely the types of jobs we must keep and grow in the United States ...” (California Health Care Institute et. al., Letter To Sen. Dianne Feinstein (D-CA), 9/18/09)

House Dems’ Version Of Obama-Biden Health Care Experiment Would Hit Minnesota’s Small Businesses In Medical Innovation Industry With Job-Killing Income Tax Hike. “This [surtax] would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study... America’s successful small businesses would pay higher tax rates than the Fortune 500, and for that matter than most companies around the world ...” (Editorial, “The Small Business Surtax,” The Wall Street Journal, 7/14/09)

LESS MEDICAL INNOVATION FROM MINNESOTA WILL MEAN HIGHER HEALTH CARE COSTS FOR ALL AMERICANS

Medical Innovation Tax Will Raise Americans’ Costs For Health Care Services. “The medical-device industry is organizing companies that make everything from CT scans to contact lenses to fight a proposed $4 billion annual fee on device makers, arguing that companies across the board could get hit with the fees. And the industry is trying to rally companies that make even mundane items like condoms and Q-tips to fight the fee, as well. ... ‘They’re going to get walloped upside the head with a new tax during a struggling economy,’ he [AdvaMed chief lobbyist Brett Loper] said. ‘Hopefully, we can convince enough people that a medical products tax will only increase the costs.’“ (Chris Frates and Carrie Budoff Brown, “Medical-Device Makers Launch Blitz,” Politico, 9/14/09)

CBO Says Tax Will Cause Health Care Premiums To Rise. “Under current law, premiums on employment-based plans would not include the effect of the annual fees imposed under the proposal on manufacturers and importers of brand-name drugs and medical devices, on health insurance providers, and on clinical laboratories. Premiums for exchange plans would include the effect of those fees, which would increase premiums by roughly 1 percent.” (Douglas W. Elmendorf, Letter to Sen. Max Baucus (D-MT), 9/22/09)

And Medical Innovation Tax Only Part Of $506 Billion In New Health Care Taxes And Fees In That Will Raise American Families’ Premiums By $4,000 Over Next Decade. “[B]y 2019 the cost of single coverage is expected to increase by $1,500 more than it would under the current system and the cost of family coverage is expected to increase by $4,000 more than it would under the current system. This amounts to an 18 percent increase in premiums by 2019;” “[T]he health reform bill being proposed by the Senate Finance Committee as introduced ... include[s]: An excise tax on employer-sponsored high value health plans (or ‘Cadillac plans’) that in a few years could also raise premiums for some moderate value plans ... New taxes on health sector entities that are likely to be passed through to consumers.” (Congressional Budget Office, “Letter to Chairman Max Baucus,” 10/7/09; PricewaterhouseCoopers, “Potential Impact Of Health Reform On The Cost Of Private Health Insurance Coverage,” 10/11/09)