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What Would A Medical Device Tax Do To MN?

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(credit: CBS) Pat Kessler
Pat Kessler knows Minnesota politics. He's been on the beat long...
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MINNEAPOLIS (WCCO) — Earlier in the day, the U.S. House’s plan to end the shutdown included a two-year delay on a medical devices tax, which is a big issue for many Minnesota companies.

The White House, however, is opposing any changes to the Affordable Healthcare Act as the price for ending the shutdown crisis.

There are more than 400 medical device companies in Minnesota, with more than 30,000 workers. It’s become one of the largest industries in the state with names like Medtronic, St. Jude Medical and 3M, but it’s also home to hundreds of startups.

Now, industry leaders say the medical device tax is slowing down what’s been explosive job growth.

“Small companies with 20 people. They’ve just got themselves on the market. They need two or three more sales people or they need a couple more engineers to replace engineers who have gone away. They simply can’t do it,” Shaye Mandle of Life Science Alley said.

The 2.3 percent health care excise tax is applied on the sales of devices like pacemakers, hips and MRI machines sold to hospitals, raising $30 billion for health care over 10 years.

President Obama supports it, even telling our Frank Vascellaro last year he won’t negotiate a repeal.

“No. The health care bill is gonna provide those medical device companies with 30 million new customers,” Obama said.

However, every Minnesota member of Congress, Democrat and Republican, opposes the tax. Democratic Sen. Amy Klobuchar is trying to include it in budget talks after the government re-opens.

“I’d like to see major changes to the medical device tax. Get that repealed,” Klobuchar said.

Meanwhile, device manufacturers say for the first time, life-saving medical products are treated the same as alcohol, tobacco and firearms.

“In this country, when you are developing therapies that improve people’s lives, you wouldn’t expect to be treated in the same way as those things that actually degrade public health,” Mandle said.

House Republicans ended up dropping the device tax delay part of the plan because it did not have enough votes to pass. They will vote Tuesday night on their revised plan.

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