U.S. News

Medical-Device Tax Could Cost US Jobs: Industry Official

A spokesman for the medical-technology industry warned that a new medical-device tax that goes into effect in 2013 under the Obama health-care law could force some companies to cut jobs.

"We’re very concerned about the tax," Stephen Ubl, CEO of the Advanced Medical Technology Association, told CNBC Wednesday.

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He said the tax would leave companies with "two very bad choices" — reduce jobs and spending on research and development or pass the cost of the tax on to consumers, which "would raise the cost of care and potentially undermine one of the primary goals of health-care reform."

There are over two million Americans employed by the medical-technology sector in "high-paying, high-tech jobs," Ubl said. "We need more of them. So the tax is counterproductive to those [job-creation] efforts."

These companies are "poised to introduce incredible technologies that are going to improve people’s lives," he said, at a time of "macroeconomic headwinds" and a U.S. regulatory environment that is not competitive, uncertain, unpredictable and untimely.

In the same interview, John Babitt, head of medical-technology practice for the Americas at Ernst & Young, said the tax might drive medical-technology companies to look overseas in deciding "where to establish headquarters, where to establish R&D." He said 60 percent of medical-technology revenue comes from outside the U.S., making the industry "good exporting companies."

Click here for Stryker CEO Stephen MacMillan 's comments on the health of medical-device industry and his company.