Tuesday, July 19, 2016
The Benefits of the Medical Device Tax Suspension
In 2013 the Patient Protection and Affordable Care Act was enacted. Part of the legislation called for a on sales of medical devices in the US, by both domestic manufacturers and importers. Since the implementation of the tax, it has not produced the expected revenue.
Originally it was expected that $30 billion would be raised from the tax due to increasing number of Americans covered by health insurance and, therefore, receiving medical treatment. However, that number came up short. During its first year it only raised 60% of those estimated taxes.
The tax ended up being costly to small businesses, resulting in layoffs, cutting of research and development projects, and ultimately delaying some expansion plans. The additional tax disproportionately affected small and medium sized business, who already struggled under the growing industry regulatory structure.
Realizing the strain this tax was causing on small medical device manufacturers, on December 18, 2015, the Consolidated Appropriations Act was signed. This act began a two year moratorium on the medical device tax, starting January 1, 2016 and expiring December 31, 2017. Researchers have noted that the suspension of the tax will positively impact the medical device market in the US. The money that would have been spent taxes can now be invested in human resources, research and development, manufacturing expansion, and other areas. This positive reaction from industry leaders and government officials may lead to a permanent repeal of the tax once the suspension period ends.
Regardless of the political environment, at we are committed to offering measurement solutions to the medical device and many other industries, such as force and torque gauges, and tension and compression testing systems. Our products help to ensure that manufactured medical devices meet performance and quality standards, with the ultimate goal of maximizing patient safety and outcomes. Mark-10 will continue to work with medical device manufacturers to develop solutions that best meet manufacturing and quality control objectives.