Two years ago this week, President Obama signed his health care bill into law with the promises that more federal mandates, rules and regulations would lower costs, and that Americans happy with their current health insurance would be able to keep that coverage. Unfortunately, these promises have not been kept. The health care bill is getting more expensive by the day and many Americans are being driven away from the employer-provided coverage they have now.
The high costs of health care affect us as families and worsen the federal budget deficit. But they also increase the cost of doing business and the costs of creating jobs, making it harder for us to see the kind of robust economic recovery we all want. Having visited over 100 businesses in Ohio over the past few years, there is no question that health care cost increases were already taking their toll on Ohio businesses.
Unfortunately, the new law has not helped the situation. In fact, many believe the higher costs associated with the mandates in the law, along with the great uncertainty around its implementation, are among the reasons why employers are not hiring.
Small businesses tell us so. According to the latest small business survey by the U.S. Chamber of Commerce, 74 percent of small businesses say the law makes it more difficult for them to hire. Thirty-six percent say uncertainty out of Washington is one of the two biggest reasons why they’re not hiring. Thirty percent say the mandates in the law are a reason they’re not hiring.
This is certainly what I hear when meeting with business owners across our state. Employers tell me that even if their business is picking up, they are paying current workers overtime or bringing on part-time employees in order to avoid the higher health care costs associated with a new, full-time hire.
The new law also hurts the economy by imposing $500 billion in new taxes, including a new, direct increase on innovative employers in the medical device industry.
The law imposes a 2.3 percent excise tax on the sale of medical devices, effective January 1 of the coming year. The tax isn’t on profits, it’s on revenues, meaning that it will hit fragile, young companies that aren’t even yet profitable. It’s simply a revenue stream to help pay for the president’s plan – on the backs of hardworking entrepreneurs, engineers and scientists. This tax could cost tens of thousands of jobs.
Ohio is home to a lot of medical device companies, many of which are small businesses. According to the medical device industry, 80 percent of their businesses have fewer than 50 employees, and 98 percent have fewer than 500. The excise tax is not yet even in effect, and it’s already punishing employers in Ohio and other states that are hotbeds of high-tech innovation.
Last year, I visited Mound Laser & Photonics Center (MLPC) just outside Dayton, which provides laser fabrication and machining services. Dr. Larry Dosser, the president and CEO, told me the medical device excise tax could be devastating to MLPC’s business, 70 percent of which is from customers in health care and medical devices. He added that the tax might force the medical device industry to take much of its work offshore. Medical device companies across the state have shared similar stories.
As they had feared, MLPC was forced in January to lay off employees for the first time in their 16-year history. In this uncertain economic climate, medical device companies, including MLPC’s customers, are looking for ways to offset the added expenses they will face in less than 10 months when the tax goes into effect. This is hurting MLPC’s business.
This is not just an Ohio issue. Next door to us in Michigan, medical technology firm Stryker Corporation announced late last year that they will lay off 5 percent of their workforce because of the excise tax.
After two years of burdening employers, it seems clear to me that we should repeal this tax – and repeal and replace the rest of President Obama’s big-government approach to health care. There is a lot of discussion about how the new law adds to our record budget deficits and debt without adequately addressing the basic cost and access challenges Ohioans face. But it has also made it harder to create jobs in the weakest economic recovery since the Great Depression.
