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7/29/2018 4:51:00 PM
Cook Group officials still hoping for total repeal of medical device tax

Kurt Christian, Herald-Times

Cook Group Chairman Steve Ferguson has steeled himself against the hope that last week’s vote to repeal the medical device tax might reduce the capital risks associated with Cook’s redevelopment of the former GE plant.

A bipartisan vote in the House last Tuesday renewed efforts to do away with a portion of the Affordable Care Act that imposes a 2.3 percent excise tax on medical device sales. There’s no clear timeline for when the Senate might consider the Protect Medical Innovation Act, but companies such as Cook have long operated in periods of uncertainty. The medical device industry is currently operating under a four-year grace period, but without a full repeal, Ferguson said, 10-year projects like the redevelopment of the GE plant may be re-evaluated.

“You can’t cut paper clips and get to the amount that is due under this tax,” Ferguson said. “We started the GE project assuming that this tax is not going to be in effect. If in fact it comes back in effect, you’ve got to go back and make the same analysis. Where do you cut? Our answer is: We never cut employees, so you eliminate that, and your life blood is (research and development). So what you’ve got to do is cut capital projects. 

Ferguson said there are no easy cost-cutting decisions for a company that makes life-saving devices. Paying such a tax would cost Cook each year close to the amount it invested in building a plant in Canton, Ill.

He takes issue with the medical device tax’s creation, saying the tax was made in accordance with politics instead of public policy. Proponents of the medical device tax initially asserted the tax would help offset the cost of the Affordable Care Act and pay for health insurance subsidies.

The Joint Committee on Taxation estimated that tax would have generated $3.2 billion in revenue in 2018, but the second delay signed by President Donald Trump in January of this year effectively pushed back the collection of that tax until Jan. 1, 2020.

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