Group Tells Stryker CEO that Path to Ending Job and Innovation-Killing Medical Device Tax is Blowing in the Wind

ObamaCare Tax Provision Causing Widespread Layoffs and Hampering Innovation

Kalamazoo, MI / Washington, D.C. – At today’s annual meeting of Stryker shareholders in Kalamazoo, Michigan, a representative of the National Center for Public Policy Research presented Stryker CEO Kevin A. Lobo with a path to repealing a major ObamaCare provision that has already caused massive layoffs at the medical supply company.

“It’s clear that Stryker executives are concerned about the future under ObamaCare,” said Stacy Swimp, a member of the Project 21 black leadership network who was representing the National Center at the Stryker shareholder meeting. “While ending wind power subsidies to offset a medical device tax repeal was a new idea for Styker CEO Kevin Lobo, it was something he said he would consider supporting.”

An audio recording of the exchange can be found here.

Embedded in the Affordable Care Act (ObamaCare) is a 2.3 percent excise tax on medical device manufacturers and suppliers. Intended as a revenue-booster for the astronomically expensive ObamaCare legislation, the tax took effect at the beginning of 2013. However, layoffs are already occurring across the medical device field as fears grow that innovation will suffer and that higher costs may be passed on to consumers.

“When she was Speaker of the House, Nancy Pelosi foisted ObamaCare on the American people by saying ‘we have to pass the bill so you can find out what is in it.” Well, part of ‘what is in it’ is misery for many American workers in the medical device field,” said Swimp. “What is in it for the medical device industry is layoffs and a drain on money that can fund new innovation. That’s bad news for them and for America as a whole.”

Late last year, in anticipation of the coming medical device tax, Stryker announced it would lay off 1,170 workers – approximately five percent of its workforce. Leaving no doubt that ObamaCare was to blame for the layoffs, at the time of the layoffs Stryker spokesman Yin Becker explained: “The targeted reductions and other restructuring activities are being initiated to provide efficiencies and realign resources in advance of the new Medical Device Excise Tax scheduled to begin in 2013.”

Responding directly to Project 21’s Swimp, Stryker’s Lobo said he continues to be “very concerned” about ObamaCare’s medical device tax, noting Stryker expects to pay $100 million on it this year — the equivalent of 20 percent of the company’s research and development budget. Lobo added: “[W]e would much rather use those dollars to create jobs and provide innovative products and services to enhance and save patient lives.”

Stryker isn’t the only company having to lay off employees due to ObamaCare’s medical device tax. In a new paper, National Center health care analyst David Hogberg, Ph.D. explains that almost 20 percent of companies in the medical device field plan to make staff cuts because of the tax. Additionally, medical tech company Smith & Nephew and medical device company Zimmer Holdings have announced layoffs related to this ObamaCare tax increase.

Swimp presented Stryker’s CEO with a proposal favorably assessed in Hogberg’s paper to repeal the medical device tax. Currently, there is bipartisan support among lawmakers in Washington, D.C. for repeal, but efforts to do so have stalled over concerns about replacing the revenue from the tax. Hogberg explains that ending the production tax credit for wind energy could replace more than 60 percent of the revenue lost from repeal of the medical device tax. The National Center’s wind subsidy repeal proposal was new to Lobo. He told Swimp: “[W]e’ll take it under advisement.” Afterwards, Swimp spoke privately with Lobo. Swimp said that Lobo was truly concerned about the effects the medical device tax would have on the company’s ability to research new innovations and improve current products. Swimp also said that his question was broadly supported by other shareholders he spoke to when the meeting was adjourned. “Ending this jobs-crushing ObamaCare tax should be a top priority for Washington,” said Swimp. “The tax repeal can be kept revenue friendly by halting the innovation-crushing production tax credit.”

A copy of Swimp’s question at the shareholder meeting, as prepared for delivery, can be found here.

National Center for Public Policy Research Executive Director David Almasi is a Stryker shareholder. Swimp served as Almasi’s proxy at today’s meeting.

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market independent conservative think tank. Ninety-four percent of its support comes from individuals, less than four percent from foundation and less than two percent from corporations. It receives over 350,000 individual contributions a year from 96,000 active, recent contributors. In 2012-13, zero percent of its contributions came from the fossil fuel industry or related foundations.

Contributions to The National Center are tax-deductible and greatly-appreciated.


The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.