It is clear that we need to get our fiscal house in order, drive down our deficit, and control the spiraling cost of health care. Wouldn’t it be great if there was a way to do all this at once? Fortunately for Coloradans, there is, and the answer lies in a key part of our state’s economy.
We’ve had the privilege to work in the dynamic world of medical technology for more than 20 years. This industry is a unique American success story that combines innovation, patient care, clean technology and cutting-edge engineering. The United States leads the world in this field, and it is one of the few industries that actually enjoys a net trade surplus.
A recent report found that medical device jobs in Colorado increased 16 percent during the past decade, and the number of companies increased by almost 20 percent. The medical device industry has more than 11,000 workers in Colorado and supports an additional 28,000 jobs. Positions in this field pay on average 40 percent more, require highly skilled people, and support a significant portion of Colorado’s manufacturing sector.
Unfortunately, this economic engine is at risk due to the new tax on medical device innovators – innovators aimed at delivering better patient outcomes and striving to deliver solutions that decrease the overall cost of care.
As a part of the health-care reform legislation, a 2.3 percent medical-device excise tax will be instituted in 2013. This is a highly regressive tax on revenue, regardless of a company’s profitability. If not repealed, this policy will stifle job growth, impede improvements to patient care, and threaten the Centennial State’s medical technology manufacturing base.
As is typical in this research and development heavy industry, it takes many years to become profitable, and we have recently crossed this threshold. Under the new medical-device tax, we will take a significant step backward. We will face tough decisions on how to defray this tax. Could you imagine if you had no income during a year and still owed the IRS taxes? That’s how misguided this policy is.
There are many startups and young companies in Colorado in the same boat. These are great job-creators and innovators who advance patient care and propel economic growth. Several medical-device companies across the nation already have announced strategies to address this issue through price increases passed on to hospitals and patients, layoffs and reductions in research and development investment as a preventative fiscal management strike to defray this tax.
We invite you to join us as we work with our elected officials to amend or repeal this legislation. People throughout our state and nation will benefit from a successful effort. The engineers, doctors, entrepreneurs and others who make up this dynamic industry are ready to help turn this economy around, improve patient care and drive down costs. Now more than ever, we need Congress to help us do so by repealing the medical-device tax.
Scott Drake is president and CEO, and Guy Childs is chief financial officer of The Spectranetics Corp., a medical device company based in Colorado Springs. They can be reached at 1-719-447-2000.