In my article the other day on the Baucus health care bill, I noted the new taxes he has proposed in order to pay for it. Today, a Wall Street Journal editorial took a close look on one of those taxes — a $4 billion per year levy on medical device makers. The editorial highlights how damaging it would prove to an important industry:
This new tax will eventually be passed through to patients, increasing health-care costs. It will also harm innovation, taking a big bite out of the research and development that leads to medical advancements. The core of the industry (excluding a few conglomerates like Johnson & Johnson) spent about $9.6 billion on product development in 2007, according to Ernst and Young. The Baucus tax is nearly half that, and also exceeds $3.7 billion, the total venture capital invested in device makers that same year.
John Kerry, representing a state with a large medical device industry, has expressed concern about the measure.