08 May 2013 Free-Market Group Proposes Plan for Repeal of Major ObamaCare Tax Provision to Zimmer Holdings CEO
ObamaCare Tax Places 43,000 Medical Device Industry Jobs in Jeopardy; Zimmer Forced to Make Staffing Cuts
Zimmer CEO Stands with National Center for Public Policy Research in Seeking Full Repeal of the Medical Device Tax
Indianapolis, IN / Washington, D.C. – At the annual meeting of Zimmer Holdings shareholders in Indianapolis Tuesday, a representative of the National Center for Public Policy Research presented Zimmer CEO David Dvorak with a proposal to repeal a major ObamaCare tax that is responsible for thousands of newly unemployed medical device workers losing their jobs.
“Dvorak stands firmly with our goal of repealing the medical device tax,” said National Center Free Enterprise Project Director Justin Danhof, Esq. “According to Dvorak, this tax has taken a unique American success story – medical device innovation – and set it on a path where high-cost and high-regulation policies may drive it from the United States. This ObamaCare tax is now forcing medical device companies to reconsider where they will innovate, manufacture and try to grow.”
Danhof and Dvorak met privately to discuss their mutual interest of repealing the medical device tax.
“I was impressed that Dvorak took the time to meet with me one-on-one,” said Danhof. “It is clear he is a serious business leader who wants what is best for Zimmer’s shareholders, the medical device industry and American patients. And right now, what would be best for those constituencies would be a repeal of the medical device tax.”
In December 2012, DrugWatch.com reported that Zimmer cut 450 jobs in 2012 in anticipation of ObamaCare’s medical device tax.
Embedded in ObamaCare is a 2.3 percent excise tax on medical device manufacturers and suppliers. Intended as a revenue-booster for the astronomically expensive ObamaCare law, the tax took effect at the beginning of 2013. Layoffs are already occurring across the medical device field.
“Medical device experts predict that as many as 43,000 jobs in their industry may be destroyed by this onerous tax,” explained Danhof. “Zimmer CEO Dvorak explained that the current job losses due to the tax only tell part of the story and are likely underestimated. As medical device companies reassess their entire business models, new hires may be delayed, and some jobs may be ‘saved’ by companies moving facilities to lower-cost jurisdictions. ObamaCare is unraveling and many portions are being delayed; yet there is no delay in this tax that is already taking a toll on jobs, innovation, the economy and patients. Congress should move to immediately repeal this nightmare.”
“Dvorak explained that the tax was ‘sold’ to many in his industry on a false premise. They were told by lawmakers that an influx of patients would drive revenue, but Dvorak rejected that premise at the time, and his fears were accurate, as that promise has failed to eventuate,” explained Danhof.
Zimmer 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. For example, medical tech company Smith & Nephew and medical device company Stryker have announced layoffs related to this ObamaCare tax increase.
Danhof presented Dvorak with a proposal that is favorably analyzed in Hogberg’s paper. Hogberg explains that ending the federal production tax credit for wind energy could replace more than 60 percent of the revenue lost from repeal of the medical device tax.
“Dvorak liked the proposal and is going to take time to give it a full evaluation. I hope in the end he endorses our proposal and we can work together – with other medical device companies and free-market advocates – to set the unique success story that is American medical device innovation back on track,” added Danhof.
In the last two weeks, the National Center’s Free Enterprise Project has presented this same proposal to the CEOs of Stryker, Johnson & Johnson and General Electric.
A copy of Danhof’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 Zimmer shareholder. Danhof served as Almasi’s proxy at Tuesday’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.
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