MINNEAPOLIS (WCCO) — Minnesota’s medical device makers say a new tax to help pay for the federal health care law could cause cutbacks, and even layoffs.
The state is home to more than 700 medical device companies, and between 250,000 to 300,000 workers.
The nine employees left at Signus, a Chanhassen-based spinal implant company, took a 40 percent pay cut, and the owner isn’t getting paid at all.
He blames the new medical device tax.
“I look around and I don’t know how to explain it to everybody,” said Tom Hoghaug of Signus Medical. “Sorry, I have to lay you off because I have to pay tax to the federal government.”
Nationwide, the new 2.3 percent medical device tax will raise $3 billion dollars for the health care law known as “ObamaCare.”
And 20 to 25 percent of that tax could be paid for by Minnesota companies.
Minnesota Congressman Erik Paulsen is trying to repeal the tax — an effort that has bipartisan support from Minnesota Democrats and Republicans.
“There have already been thousands of layoffs across the country,” Paulsen said. “That means fewer jobs. It means less innovation.”
Not everyone is against this tax. The industry is profitable, and analysts predict it will get bigger.
President Obama told WCCO in December that he thinks it’s fair.
“The health care bill is going to provide those medical device companies 30 million new customers,” he said. “It’s going to be great for business, and they are doing really well right now.”
Minnesota companies say it will mean cuts for things such as research and development, the kind that developed Aaron Holm’s high-tech artificial legs.
“Computer talks to a hydraulic unit that allows it to check 50 times a second,” said Holm, of the Wiggle Your Toes Foundation. “And tells the legs what I am doing, and how I am doing it. It allows me to walk down steps, ramps, etc.”
Minnesota Democratic Senators Amy Klobuchar and Al Franken are sponsoring a medical device tax repeal in the Senate.