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Kosciusko County concerned over medical device tax

 Kosciusko County says it's bracing for a massive economic hit, if the House's version of health care reform is eventually signed into law. The bill would impose a tax on companies that make medical devices, which are responsible for more than a third of the county's economy.

Warsaw is called the Orthopedic Capitol of the World for a reason. In a 32 billion dollar industry, one-third of the medical devices in the world are produced there. Many say if the new tax on medical device firms goes through, it could be devastating for the local economy.

 "We are trying to do something entrepreneur and provide a new product," says David Bailey, Ortho-Pediatrics vice president. They're leading the way in developing implants for children suffering from orthopedic conditions. Bailey says a new tax would not only hurt them, but all medical device industries in the county.

The health care reform plan passed in the House would impose a 2.5 percent new tax on sales of medical devices. The Kosciusko county chamber of commerce has been vocal in its opposition to the bill. The chamber has sent letters to both state and national leaders, stressing the dramatic impact this could have on the industry.

"It seems to be a double whammy because we get not only the surcharge, but we also get limitation the bill has proposed on the dollar amount that can be reimbursed by hospitals," says Joy McCarthy-Sessing, chamber president.

"This legislation would bring in 1.5 trillion dollars in revenue," says Congressman Joe Donnelly. He's been working with Kosciusko County's medical device companies to help shape the legislation. Donnelly says the higher tax will be more than offset by higher revenues.

"There will be a much larger pool of people who are eligible to have these products and to use these products and their revenue will be significantly expanded," says Donnelly.

Congressman Donnelly did vote in favor of bill, and says he and Senator Evan Bayh were able to reduce the tax that was originally proposed.

This bill still has to go through the Senate, so nothing is set in stone. It could be modified and the tax could also be taken out of the bill.