Taxing Issue: How Obamacare Hurt PPE Production

The coronavirus pandemic has made the production of medical supplies and personal protective equipment (PPE) a major focus in America. In recent weeks, we've seen the president invoke executive orders for production of things like masks and ventilators, while several companies have voluntarily shifted their operations to solely producing items needed for the fight against coronavirus. But one of the reasons our nation has had to scramble to ramp up production of medical equipment can be traced back ten years, to the signing of the Affordable Care Act, a.k.a. Obamacare.

A controversial but now mostly forgotten provision in Obamacare--the medical device tax--hampered the production of medical equipment in our country for years leading up to the coronavirus pandemic. "The Obamacare medical device tax imposed a 2.3 percent tax on gross medical device sales for all American companies," says John Kartch with Americans for Tax Reform. "This applied even if the company made no money in a given year, or even lost money, so it hit all companies hard."

The medical device tax was originally set to begin in 2013, but Republicans in Congress were able to delay it for the remainder of the Obama presidency. However, the constant threat of the tax was a hindrance to any U.S. company in the medical supply sales or production business. "It put American medical device manufacturers at an enormous disadvantage," says Kartch. "And unfortunately a lot of these jobs and products moved overseas."

President Trump ultimately repealed the medical device tax permanently, one of six Obamacare taxes repealed by Trump since he took office. Nevertheless, the damage done from the years of the tax hanging over the medical device industry hurt U.S. production prior to the arrival of Covid-19. "As we prepare for the future and recover from the virus now, it is fortunate that we've been able to get rid of that Obamacare tax, and we've got to make sure that Democrats don't try to bring it back," says Kartch.

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