Health care for all is a goal on which politicians, medical professionals and patients can agree. However, the devil is in the details, and one of those details is how to pay for this expanded care.
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November 2012One provision in the Affordable Care Act (ACA) is a new excise tax on medical device sales. At first glance, this provision is certainly a good source of revenue—it is estimated that the new tax will raise $20 billion by 2019. But the ripples from its impact on medical devices could have unforeseen and far-reaching consequences, not only for manufacturers and importers but also for individual clinical practices.
A New Excise Tax
The new tax, described in Section 9009 of the ACA, applies to businesses that manufacture or import medical devices. The tax goes into effect on January 1, 2013, but is retroactive to any sales made after December 31, 2008. The tax is on total sales rather than profits. (Resellers are not affected.) Because it’s considered an excise tax by the Internal Revenue Service, it isn’t paid for directly by the consumer, although the cost of an excise tax is often added to the product when it’s sold.