Repeal Medical Device Tax and Promote Wellness
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This document discusses several bills and policies related to workplace wellness programs and the medical device tax. It provides background on the medical device tax implemented as part of the Affordable Care Act, which levies a 2.3% tax on medical device revenues estimated to cost the industry $3 billion annually. Repeal bills have been introduced at the federal and state levels. The document also summarizes concerns about the impact of the tax on consumers, providers, jobs and innovation. It outlines provisions in the ACA supporting workplace wellness programs and potential benefits in reducing costs, but also flags concerns about coercion, cost-shifting and lack of equity.
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Repeal Medical Device Tax and Promote Wellness
- 1. Federal - HR 1295 State – HB 391 Kathryn Fiddler Nursing 525
- 2. The Job-Killing Medical Device Tax National Center for Policy Analysis Non profit, non partisan organization Examines public policy significant to Americans Suggests positive change based on the best scholarly research
- 3. HB 1295 – Repeal the excise tax on medical devices PPACA 2010 Embedded taxes to offset $1trillion cost Medical Device tax of 2.3% Taxes paid on all revenue Estimated cost to medical device companies = $3 billion annually Additional costs for medical devices to be passed on to consumers, providers and hospitals
- 4. What is a medical device? “Instrument, apparatus, implement, machine, implant, or other similar or related articles including a component of those articles – For example: Durable medical equipment Stents, pacemakers, orthopedic implants Monitors, imaging machines
- 5. Who will this tax impact? Medical Device Industry Decreased profit margins Increased outsourcing Supply disruptions or shortages
- 6. Who will this tax impact? Consumers and health care providers Increasedcost of national health expenditures Less innovation related to less resources
- 7. Who will this tax impact? US Workers Deviceindustry employs 430,000 workers Averagesalary is 40% greater than average US pay Layoffs and job loss
- 8. Recommended repeal of the Medical Device Tax Significant blow to a growing health care industry Increase cost of care Result in loss of American high paying jobs
- 9. Health Policy Brief: Workplace Wellness Programs Robert Wood Johnson Foundation Healthaffairs.org Mission: To improve the health and healthcare of all Americans
- 10. Workplace Wellness Programs Americans have poor health habits Growing rate of chronic disease Rising cost of health care Wellness programs Reduce absenteeism Reduce employee turnover
- 11. Workplace Wellness Programs Affordable Care Act provisions Increased rewards for employees who meet health goals Offer reasonable means for meeting standards Provide yearly opportunity to enroll Rewards must provide equal opportunity to similar people
- 12. Workplace Wellness Programs Concerns - Employers Employers desire flexibility as well as opportunity for meeting goals Employees should bear burden of lifestyle choices Seek opportunity to improve productivity and reduce costs
- 13. Workplace Wellness Programs Concerns – Unions and Consumer Groups Cost shifting versus health improvement Incentives are unfair Poorly designed programs may “Coerce” rather than encourage
- 14. Workplace Wellness Programs The Future 63% of employers have workplace wellness programs Literature suggests wellness programs decrease costs Average health care costs fell $3.27 for ever 1$ spent Costs for absenteeism decreased by $2.73 ACA provides for rewards up to 50% of employee health benefit costs Employers need to consider equity for all employees as they develop these programs
- 15. References HB 391 State Employees and Retiree Health and Welfare Benefits Program - Wellness Program, 2013 Session Stat. (2013). Retrieved March 21, 2013 from http://openstates.org/md/bills/2013/HB391/ Herrick, Devon. (2012). The Job-Killing Medical Device tax (pp. 1-4). Washington, D.C.: National Center for Policy Analysis. HR 1295 - To amend the Internal Revenue Code of 1986 to repeal the excise tax on medical devices, and for other purposes. (2013, March 23, 2013). Retrieved March 21, 2013, from http://beta.congress.gov/bill/113th-congress/house-bill/1295 James, J. (2012). Health Policy Brief: Workplace Wellness Programs. In Health Affairs, (pp. 1-5). Washington, D.C.: Robert Wood Johnson Foundation.
Editor's Notes
- Hello, I am Kathryn Fiddler and I would like to present today an overview of a House Rule 1295 – Repeal of the medical device tax and, presently before the US congress and house Bill 391, State employees and retiree health and welfare benefits program, the wellness program, before the Maryland legislature. Both of these bills are part of the Spring 2013 legislative sessions.
- The first bill, repeal of the medical device tax, is part of a policy brief written by Devon Herrick f the National Center for Policy Analysis. This is a non profit, non partisan organization which examines policy significant to the American people.
- The Patient Protection and Accountable Care Act of 2010 was funded through a series of embedded taxes in an effort to offset the 1 trillion dollar cost One of these taxes is the medical device tax. It starts in 2013 with the addition of a 2.3% tax on all revenue, not just profits. Presently device companies pay 3.1 billion dollars in annual corporate taxes and this additional tax will nearly double those taxes an additional 3 billion dollars. It is these taxes that will be passed on to providers, consumers and hospitals.
- To understand why this matters, it is important to know what medical devices are. Medical devices include durable medical equipment (bedpans, hospital beds) as well as cardiac stents, pacemakers, joint replacements, as well as monitors and imaging machines
- The medical device industry will be impacted. This may be apparent in decreased profits, for some already struggling companies this may mean budgets in the red. This tax may mean US companies consider outsourcing and take jobs away from the US. Decreased profits may also relate to supply disruptions or shortages for certain medical device items
- Impact will also be felt on the consumers of health care and the providers National health expenditures will increase. Costs for this tax will be passed on to health care providers, hospitals and patients. Consumers already delay expensive procedures such as total joint replacements may have to consider additional delays. This increased cost may also relate to decreased availability of research and development funding
- US workers will also be impacted. The Medical device industry has already been affected by the Accountable Care Act, Stryker Corporation announced 1100 layoffs in 2011 in order to cut costs in advance of the tax Covidien has already layed off 200 US employees and is moving its operation to Mexico Former Chief of Labor Department has estimated the tax will result in the loss of 45,661 jobs across the industry
- The Medical Device tax will have a significant impact on health care, consumers, and the device industry if not repealed. This impact may weaker our current robust medical device industry, increase the cost of health care and result in the loss of high paying jobs in the United States
- This bill considers a plan to add a wellness program to State of MD employee and retiree benefits program. The Robert Wood Johnson foundation has written a robust policy brief about workplace wellness programs and their value to employers and employees. The mission of the foundation is to improve the health and healthcare of all Americans.
- As healthcare providers we are aware that Americans health is not improving. We have growing rates of chronic disease and increasing costs. In light of this, 63% of employers have workplace wellness programs. These programs are valuable in reducing absenteeism and reducing employee turnover
- The Affordable care act provides for many new provision to encourage wellness programs. The increase reward for participants is now 30% of the total cost for an individuals or families health coverage. It also requires they are designed to promote wellness, but not overly burdensome. An example of this might be a plan that gives individuals a pedometer for walking, but does not provide a similar activity for those who are wheelchair bound The provisions also include yearly enrollment opportunities as well as the ability for employers to waive certain requirements – for example, no waist measurements for pregnant women
- Employers desire to have the most control possible with wellness programs. They want employees to participate and understand the cost value related to wellness initiatives such as smoking cessation and weight reduction Many employers feel employees should bear some of the burden of their poor health care choices and the cost should be passed on to them and look for opportunities to improve productivity
- Unions and consumer groups are concerned that these programs will have little impact. There is a fear that these incentives will only shift the illness burden costs to the sick These groups also advocate for the chronically ill and recognize that chronic illness is not completely under one’s control There is also concern that some chronically ill individuals may feel pressured to participate in certain programs despite recommendations to the contrary from their health care provider
- So the overall takeaways related to employee wellness – They have shown success. 63% of employers have wellness programs in place. The literature suggests these programs are decreasing health care costs and absenteeism costs – A win for employers The ACA provides for increases in employee wellness awards up to 50% of their health are cost In order to continue to make these programs a success, employers will need to consider employee equity and be cognizant of the struggles of those with chronic diseases.
- So the overall takeaways related to employee wellness – They have shown success. 63% of employers have wellness programs in place. The literature suggests these programs are decreasing health care costs and absenteeism costs – A win for employers The ACA provides for increases in employee wellness awards up to 50% of their health are cost In order to continue to make these programs a success, employers will need to consider employee equity and be cognizant of the struggles of those with chronic diseases.