The Truth-O-Meter Says:
Crossroads GPS

Says Sherrod Brown voted "for the $1.17 trillion health care law that adds a new tax on Ohio manufacturers."

Crossroads GPS on Wednesday, August 15th, 2012 in a campaign commercial

Crossroad GPS says the $1.17-trillion health care law Sherrod Brown backed taxes manufacturers

Crossroads GPS, the conservative political advocacy group created by Karl Rove, is one of the top spenders among the third-party organizations targeting Democratic U.S. Sen. Sherrod Brown in his re-election battle with Republican Ohio Treasurer Josh Mandel.

A spin-off of the group American Crossroads, it has spent money most visibly on television ads attacking Brown's record.

Among them is "Doing," a 30-second spot whose several claims include the assertion that Brown voted "for the 1.17 trillion dollar health care law that adds a new tax on Ohio manufacturers."

PolitiFact Ohio wondered particularly about a tax aimed at manufacturing. We asked Crossroads how it supports its cost and tax claim.

Crossroads pointed to a July report from the nonpartisan Congressional Budget Office. The report says that the insurance coverage provisions of the Affordable Care Act -- the healthcare law commonly known as Obamacare -- contains added costs of $1.17 trillion from 2012 to 2022, confirming the figure in the ad.

The cost figures only paint part of the picture, however.

The CBO report, and the staff of the congressional Joint Committee on Taxation, noted that the cost figures "do not include the budgetary impact of other provisions of the ACA, which in the aggregate reduce budget deficits."

When assessing the overall cost of the health care law, the CBO said it could actually reduce budget deficits, because of its provisions that reduce net outlays and because of provisions that increase federal revenues. Those offset the added costs, and then some.

One of those provisions is a 2.3-percent excise tax on the sale of medical devices.

Crossroads GPS cites that as the "new tax on Ohio manufacturers," and notes that the Joint Committee on Taxation says it will generate $20 billion in revenue by 2020.

The tax does not apply to devices made for export, or to eyeglasses, contact lenses, hearing aids or other medical device "generally purchased by the general public at retail for individual use," the law states.

It applies to imported devices as well as those made domestically.

In responding to our query, Crossroads GPS also pointed to a 2011 study financed by the Advanced Medical Technology Association, or AdvaMed. It said that the excise tax would cause 10 percent of device manufacturing to move offshore, leading to the loss of 43,000 U.S. jobs.

An analysis by the research service Bloomberg Government, however, found that the trade group's study "is not credible." Bloomberg concluded that its assumptions conflict with economic research, overstate companies’ incentives to move jobs offshore, and ignore the positive effect of new demand created by the healthcare law.

Crossroads GPS also cited an article in the Columbus Dispatch, "Medical-device makers fight tax," to show the tax's negative effects on jobs.

But the same article notes that AdvaMed and industry officials "could not cite an example in Ohio of a company that has cut jobs or put growth plans on hold in anticipation of the tax."

Where does that leave us?

The ad's statement is partially accurate. The Crossroads ad puts an accurate figure on the 10-year net cost of the healthcare law.

But the claim leaves out several important details.

While there is a federal cost generated by the insurance requirements, overall the law would reduce federal deficits, according to the same reports that Crossroads cites.

The law does include an excise tax on the sale of medical devices. Its impact is arguable. Dissenters say it could cost jobs and force business overseas.

But portraying it broadly as "a new tax on Ohio manufacturers" over bills the scope of the tax.

In Ohio, Crossroads said, about 20,000 workers are employed by makers of medical devices and equipment. Those jobs amout to about 3 percent of the more than 660,000 workers in Ohio that the U.S. Bureau of Labor Statistics says are employed in manufacturing.

On the Truth-O-Meter, the claim rates Half True. 

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About this statement:

Published: Thursday, August 30th, 2012 at 6:00 a.m.

Subjects: Health Care, Taxes

Sources:

Crossroads GPS, "Doing," Aug. 15, 2012

Email from Crossroads GPS media office, Aug. 24, 2012

Congressional Budget Office, "Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the recent Supreme Court Decision," July 2012

Congressional Budget Office, "CBO Releases Two Analyses Related to the Affordable Care Act," July 24, 2012

111th Congress, Public Law 111-152, March 30, 2010

Joint Committee On Taxation, "Estimated Revenue Effects," March 20, 2010

Advanced Medical Technology Association, "Employment Effects of the New Excise Tax on the Medical Device Industry," September 2011

Columbus Dispatch, "Medical-device makers fight tax," May 15, 2012


Bloomberg Businessweek, "How Much Will the Medical Device Tax Hurt?" March 22, 2012

Center on Budget and Policy Priorities, "Excise Tax on Medical Devices Should Not Be Repealed," May 31, 2012

Columbus Dispatch, editorial "Poison Pill," May 20, 2012

McClatchy Newspapers, "Medical device makers push Congress to repeal excise tax," Sept. 22, 2011

U.S. Bureau of Labor Statistics, Ohio Manufacturing Employment, Accessed Aug. 28, 2012

PolitiFact Ohio, "The National Republican Senatorial Committee says the health care law slapped Ohio small businesses with a $500 billion tax increase," April 12, 2012

Written by: Tom Feran
Researched by: Tom Feran
Edited by: Robert Higgs

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