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Over the last few months there has been talk of repealing one of the most onerous parts of the Affordable Care Act: the medical device tax. Of all of the various elements of Obamacare, why has so much attention been focused on this part of the law?

Scott Atlas writing in the Wall Street Journal last month reminded us that the “overwhelming majority of the world’s health-case innovation occurs in the U.S. This includes ground-breaking drug treatment, surgical procedures, medical devices, patents, diagnostics and much more.” He also reminds us the most of the funding for this innovation comes from private industry.

In light of these and other facts, it is not surprising that the U.S. is still ranked as the best country for health-care innovation. But that is beginning to change because of the Affordable Care Act. The Congressional Budget Office estimates that this law will levy more than $500 billion in new taxes over the first ten years in order to pay for the insurance subsidies and Medicaid expansion demanded by the law.

There is a simple rule in public policy. If you want more of something, subsidize it. If you want less of it, tax it. Taxes on medical devices and other areas of medical innovation will have a negative impact on future innovation.

Scott Atlas documents the flight of some health-care technology companies to other countries. The CEO of one company told him “that the device tax his company paid last year exceeded his company’s entire R&D budget.” You can’t blame that company for moving its research and development overseas.

Regulation by the Food and Drug Administration is also a problem. A Stanford survey of more than 200 medical-device companies found that “delays of approvals for new medical devices are now far longer in the U.S. than in many other developed countries.”

America will cease being the leader in medical innovation unless Congress repeals these taxes and regulations. Life-saving drugs and devices might never be invented because of Obamacare.

Viewpoints by Kerby Anderson

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