Siemens Healthcare (NYSE:SI) CEO Gregory Sorensen is no stranger to editorializing, especially when it comes to criticizing the 2.3% medical device sales tax implemented in Affordable Care Act.
In a recent note penned for North Carolina’s News & Observer, Sorensen blamed the medical device tax for thousands of layoffs, citing figures he obtained from a recent analysis by medtech lobbying organization AdvaMed.
The AdvaMed report, published last month, used survey information from a smattering of medtech companies across the U.S., finding that an estimated 33,000 medtech workers were fired or simply never hired as companies struggled to deal with the burden of paying the new tax. Including indirect repercussions in related industries and the economy in general, AdvaMed estimated that as many as 165,000 jobs may have been compromised.
"As an employer with more than 3,600 employees in North Carolina, I can attest to the harmful effect of this burdensome tax," Sorensen wrote. "Payments to the IRS have prevented us from investing in everything ranging from research and development to jobs."
Both North Carolina Senators Kay Hagan (D) and Richard Burr (R) have put their support behind efforts to repeal the medical device tax with Senate bill S232, the "Medical Device Access & Innovation Protection Act" authored by Sen. Orrin Hatch (R-Utah). Sorensen lauded their efforts and called for greater bipartisan collaboration to come up with way to strike the levy once and for all.
He also challenged the ever-pervasive "windfall" rhetoric, which holds that medical device makers can offset some of the costs of paying the tax with new revenue as more patients obtain medical devices with their new insurance. The industry has fought that assumptions, noting that most medtech companies rely on revenue patients already covered under Medicare and that the newly insured are more often younger patients who rarely need big-ticket items such as pacemakers or joint replacements.
Read more of MassDevice.com’s coverage of the medical device tax
Hindsight on Massachusetts’ "Romneycare" insurance plan, which is often cited as a blueprint of sorts for the Affordable Care Act, suggests that medical device use didn’t increase when newly insured patients were added to the system. Sorensen cited figures from the National Electrical Manufacturers Assn. which suggest that sales of medical imaging equipment actually dropped after the implementation of Massachusetts’ healthcare reform.
Sorensen lauded North Carolina regulators for putting their support behind repeal of the medical device tax and called for bipartisan efforts to take the levy out completely. Since taking effect at the start of 2013 the tax has already cost the industry at least $510 million, according to a MassDevice.com analysis.
The latest editorial isn’t Sorensen’s 1st attempt to wield his words against the levy. The former Harvard professor and neuro-radiologist, who joined Siemens in 2011, penned a critique in a 2013 issue of the New England Journal of Medicine, calling out a pair of fellow Harvard physicians who had argued that the tax is an important bulwark of the Affordable Care Act.
Sorensen said that his colleagues had made "factual errors that could lead to critical policy blunders.
"As an executive responsible for such decisions, I can assure readers that this tax has led to a decrease of hundreds of research-and-development jobs at my company. I have already been forced to lay off workers as a result of the tax," he wrote. "Furthermore, the math that is laid out by the authors belies their assertion: If 7 to 8% of sales are spent on research and development, as the article states, then the 2.3% tax on sales represents more than a quarter of research-and-development budgets."
Sorensen has also written editorials for theWall Street Journal, Politico and The Hill.
