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pets and paw-litics: petplan on the affordable care act

  • Dr. Kim
  • Posted by Dr. Kim Smyth on
    Staff Veterinarian and Pet Health Writer of Petplan


The Affordable Care Act, otherwise known as Obamacare, is a hot topic as of late, and pet owners could be surprised to learn that part of it may affect their pets.

One part of the Affordable Care Act is a medical device tax, which impacts veterinarians as well as human physicians. This 2.3% tax went into effect in January and is imposed on medical machinery, such as X-ray and CAT scan machines, as well as hip implants, lab equipment and the like. 

The purpose of the tax is to ensure that the manufacturers and buyers of these devices contribute to the cost of health coverage. With increased health coverage nationwide, doctors will see a boom in their business. After all, many people who previously had no insurance coverage will now be covered, and will seek medical attention where they would not have before.

With increases in doctor visits comes increased need for medical devices. So with the advent of ACA, both the manufacturers and buyers of medical devices benefit.  The 2.3% tax on medical devices can be seen as a kind of “payback” for the increase in business and will help fund the increasing health coverage available for all Americans.  In fact, the tax is expected to raise $30 billion in ten years.

Despite its benefit to human health care, the tax can prove problematic for veterinarians. The problem is twofold; first, many of the medical devices we use to diagnose and treat your pet are the exact same machines that doctors use in human medicine, and are therefore subject to the same tax. Second, pet doctors do not benefit financially from the ACA; since our animal patients are not covered by the Act, we won’t see the same increase in patients. The take home message is that veterinarians will have to pay more for medical devices – with no increase in our patient population or revenues.

Many veterinarians are already seeing a drop in patient visits due to the current economic state of the country.  And while we are trying to keep our businesses afloat, we are also always acutely aware of the high cost of veterinary care to our clients and patients who do not have pet insurance. Paying more for medical devices will surely mean that we will have to charge more for their use, and pet owners are likely not going to be too happy about that when they see our fees rise.

An alternative to paying the tax would be to delay the purchase of updated medical equipment, but that would be a lose/lose situation for both veterinarians hoping to stay current on medical advances and for patients who go undiagnosed or untreated because of the lack of equipment.

Since its inception, many veterinarians have opposed the medical device tax, and efforts to repeal it are steadily gaining ground. Some veterinarians are hoping that the tax is repealed, or at least reworded to exclude devices sold to veterinarians.  As of the end of last week, President Obama has stated that he is willing to consider changes to the tax, but the issue is currently in flux.

Manufacturers of veterinary medical devices may benefit greatly if the tax does stand, as medical devices made exclusively for veterinary medicine are currently exempt from the tax. But if the tax is not repealed, be aware that you and your pets may see yet another uptick in the rapidly increasing costs of veterinary medicine. Yet another good reason to invest in pet insurance to help protect you from the burden of paying vet bills!

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Comments
Posted by David Sandrock
on December 14 2013 19:21

Increase in business for Doctors? Perhaps, but at greatly reduced reimbursement levels which is one of the reasons MD's have stopped seeing Medicare and Medicaid Welfare (MediCal in CA) patients in ever increasing numbers.

Posted by Marty Bischoff
on December 03 2013 13:04

a 2.3% tax on the purchase price should only amount to a 2.3% increase in vet fees, only for the use of this equipment, and only until the machine is "amortized" which usually is pretty quickly. But of course vets (and people medical doctors) will use this as an excuse to raise fees across the table, and more than just 2.3%, believe you me. Like they're not outrageous enough yet! It's getting to where no average wage earner can afford to have more than 1 pet unless they have health insurance. And even then...

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Chris AshtonCo-Founder and Co-CEO of Petplan Pet Insurance
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