Soaking the Medical Devices Industry | Eastern North Carolina Now

   Publisher's note: This week's "Daily Journal" guest columnist is Contributor Donna Martinez, Carolina Journal, Radio Co-Host, John Hood Publisher, and Right Angles blogger.

    RALEIGH     I admit it. I'm crazy about my dogs. And yes, they're getting Christmas presents - chew bones for Johnny, and tennis balls for Tony and Dentley. The American Pet Products Association reports that those of us with pets - 62 percent of U.S. households - are expected to spend $53 billion on our animals this year. Nearly $14 billion will be associated with veterinary care.

    It turns out that being a responsible, loving pet owner puts millions of Americans in the financial crosshairs of the federal government. As the Heritage Foundation points out, IRS rules reveal that the medical devices tax imbedded in the government takeover of the health insurance/health care industry ensnares devices that can be used both on people and animals.

    Obamacare's 2.3 percent medical devices tax takes effect Jan. 1 and will be imposed on the manufacturer or importer of the item. It doesn't take an advanced understanding of economics to realize this tax will be passed from manufacturer to veterinarian or hospital, and then to pet owners seeking care for sick animals. Considering that my beagle is plagued by medical issues, I'm a prime target to get dinged.

    I cringe to think that sick animals will suffer because the increased cost of certain instruments and materials has moved the price of pet care beyond the owners' reach.

    Just as concerning is the job-crushing impact of the tax on the medical devices industry. Last year, Republican Sen. Richard Burr tried to repeal this ominous tax by co-sponsoring S17, the Medical Device Access and Innovation Protection Act. Burr also voted against Obamacare itself. On his blog last September, Burr wrote:

    "A recent study by Manhattan Institute senior fellow Dana Furchtgott-Roth and Hudson Institute senior fellow Harold Furchtgott-Roth illustrates one of the devastating impacts that Obamacare will have on our economy. This study affirms that the medical device tax included in the new health care law could cost tens of thousands of American jobs and would be a huge blow to American competitiveness in medicine."

    The data in the study (PDF) is alarming for an industry that employed roughly 400,000 in 2009. "Under reasonable assumptions, the tax could result in job losses in excess of 43,000 and employment compensation losses in excess of $3.5 billion," say the researchers. Twelve states are predicted to be especially hard-hit. Firms will face tough choices, and employees could face a tough future. From the study: "Under the tax, U.S. manufacturers will be more likely to close plants in the United States and replace them with plants in foreign countries."

    The economic threat is so real, even Obamacare supporters are worried (PDF). North Carolina Sen. Kay Hagan, a Democrat who voted for Obamacare, has joined 16 Democratic Senate colleagues in a letter to Senate Majority Leader Harry Reid, asking for a delay.

    "In an environment focused on increasing exports, promoting small businesses, and growing high-tech manufacturing jobs for the future, we must do all we can to ensure that our country maintains its global leadership position in the medical technology industry and keeps good jobs here at home," the letter states. It concludes: "We look forward to working with you on this critical issue that will benefit patients, innovators and boost our country's economic growth."

    Despite bipartisan opposition, President Obama doubled down on the device tax in an interview with WCCO-TV in Minnesota -- a state the Manhattan Institute study says could face serious trouble. Said the president: "And here's why: The health care bill is going to provide those medical device companies 30 million new customers. It's going to be great for business. And they're doing really well right now."

    In case there is any doubt about the president's anti-business view, or the power relationship he seeks over business, let that statement clear up the record. The president believes government should decide who is "doing really well" and who is not, and what is "great for business" and what is not.

    Wow.

    In a free market, business owners, managers, and customers make those decisions. Not government. At least they used to.