DTA discussion paper on federal health care system reform law

July 15, 2010

From the Dental Trade Alliance (DTA)

The new health system reform law creates a new excise tax on the manufacture and sale of most professional dental products that would far exceed any additional revenue or profit generated by provisions in the law to increase access to dental care. Our estimate is that the tax would be up to 70 times the potential benefit to the industry. The linked Discussion Paper explains the disproportionate effect on the dental industry. This Discussion Paper is for your information.

The law contains provisions for a tax of 2.3% on the sale of Class I, II, and III dental devices (the vast majority of dental products sold) by the manufacturer, producer, or importer. The tax applies to the price for which the device is sold by the manufacturer, producer, or importer. Although some or all of this tax may be passed through to the consumer, the committee felt that it is important to oppose the tax because 1) the potential to expand the use of the taxing mechanism in the future is likely (including increasing the tax rate), 2) any increase in the cost of dental care may negatively influence patient decisions to seek oral health care services, and 3) the tax is disproportionate to any increase in revenue by the industry and thus would cause the dental industry to subsidize markets for devices serving the medical market.

The law contains provisions to increase the amount of dental care provided under the Medicaid program, and provides that any health insurance plan sold under the state health insurance exchange program include pediatric dental care. Exchange plans are intended as a safety net for small businesses and individuals that cannot afford health insurance. While the potential additional care provided under Medicaid can be projected, it is difficult to project how many individuals will participate in the exchange plans and whether this represents “new” dental care, or covers dental care already being provided through other means.

Click here to see the DTA discussion paper.