South Jordan • A tax on medical devices was designed to generate billions of dollars a year to help pay for the Affordable Care Act, or Obamacare. Republicans suspended it for two years, but Rep. Mia Love says Utah jobs may disappear if it is not erased forever.
She called for that permanent action Monday at a news conference surrounded by officials from Utah’s medical device industry at the headquarters of Merit Medical, one of the state’s largest political donors.
Merit’s founder, Fred Lamproplous, for example, personally gave the maximum-allowed $8,100 to Love’s campaign this election cycle, plus another $18,100 to her Love Victory Committee PAC. The company is No. 9 among firms and groups that donate in the state, donating $82,000 this cycle, nearly all of it to Republicans.
“If this tax isn’t repealed, Utah’s companies won’t have the money to invest in hiring and retaining employees or updating infrastructure in this rapidly changing and competitive industry,” Love said.
“Last year, the medical device industry generated $5 billion to this state’s economy, and generated 10,600 jobs. There is a lot at stake here,” she said, adding that she called the news conference to alert Utah residents about how important the issue is.
The Affordable Care Act included a 2.3 percent tax on medical devices to help it fund health insurance. Last January, Congress suspended it for two years as part of a deal that ended a three-day shutdown of the federal government. The government estimated that the suspension cost it $3.7 billion.
Greg A. Fredde, executive vice president of Merit Medical, said the tax hurt his company during the years it was in effect.
“It represented nearly 20 percent of Merit’s after-tax profit,” he said. “Twenty percent of this company’s net after-tax profit was sent to Washington, D.C., rather than reinvested in technologies here and growth for our business.”
While the temporary two-year suspension helps, Fredde said, it still creates uncertainty that makes it difficult to invest in long-term research and development.
“Many of these projects take five, seven, 10 years,” he said, so “it is very difficult for us to plan these projects effectively. As a result of that, we simply don’t deliver as many innovative products as we would like to help patients long term.”
Love said the House has passed a bill to permanently repeal the medical device tax, and she called on the Senate to act. Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, also favors repeal, she said, and GOP senators should take advantage of his role and act this year before he retires.
“This is not just about the companies that we are trying to save,” Love said. “It’s about medical technology that is saving lives. If we continue to fall behind other countries in terms of saving lives, we are not doing our American constituents any service.”
Tara Saucedo, operations director at Stryker, another Utah medical device company, said, “The medical device tax would cost Stryker an estimated $100 million a year. The tax deferral has allowed Stryker to instead reinvest this money into research, and growth of key manufacturing sites like the Salt Lake City plant.”
Rob Fredericks, vice president of BD, another medical device firm, said, “Only full repeal of the tax will provide the certainty we need to continue to invest in innovation that addresses the most pressing health care challenges.”
Democratic Salt Lake County Mayor Ben McAdams — who is running against Love — tweeted support for repealing the medical device tax, but he did not mention Love and instead he focused on Hatch.
His tweet: “These companies employ many Utahns at good salaries. Thanks, Sen. Hatch, for your leadership on repeal of the medical device tax.”