Obamacare May Have a Bite That’s Worse Than Its Bark

Tax on Veterinary Products & Equipment

In March of 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act which included a tax that has veterinarians (and pet owners) feeling like they got nipped in the hand. A provision of the commonly called Obamacare places a 2.3 percent tax on the sale of medical devices by the manufacturer or importer. Thus, equipment that may be intended for human use but utilized by veterinarians on animals will be taxed. What type of equipment does this include? Virtually everything. Latex gloves, scalpels, stethoscopes, IV fluid pumps, endoscopes, cardiac monitors, syringes are only a few of the medical devices commonly used in a veterinarian’s office that will now be subject to the tax.

According to Section 201(h) of the Federal Food, Drug, and Cosmetic Act, a medical device is “an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is:
• Recognized in the United States Pharmacopeia,
• Intended for use in the diagnosis, treatment or prevention of disease in man or other animals, or
• Intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action.

Although Congress limited the tax to devices “intended for humans,” medical equipment for both people and animals frequently come from the same manufacturer. Consequently, the IRS proclaimed that all equipment should be taxed the same, irrespective of whether it be used for a person or animal. Clearly, this imposes an unfortunate levy upon veterinarians who in turn may decide to pass this cost burden on to their clients. As the effects of this bill trickle down to the consumer, both veterinarians and pet owners have a reason to feel stung.

Although this legislative package aims at decreasing the number of uninsured Americans and reducing the overall costs of healthcare in the United States, it has left some snarling. “It is absolutely ludicrous that there is not a specific exemption for medical equipment that will be used for non-human or veterinary purposes,” said Peter Weber, executive director of the Illinois State Veterinary Medical Association. “This is a tax to pay for a human healthcare plan.”

The American Veterinary Medical Association (AVMA) acknowledged recently that although the tax’s true impact on veterinary medical devices remains to be seen, “It’s reasonable to believe that the tax could increase the cost of providing veterinary medical care.”

More and more things boil down to the cost of doing business. With the new device tax, however, not only is the new healthcare system going to raise healthcare costs for consumers, but it will do the same for your pets. This reality is leaving some veterinarians and pet owners feeling rabid.

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