ELYRIA — A new tax on medical device manufacturers in the health insurance reform bill could force Invacare Corp. to move 1,300 jobs to Mexico or China, according to A. Malachi Mixon III, chairman and chief executive.

Mixon said the tax, which would raise an estimated $2 billion a year, just doesn’t make sense, and he is urging employees and concerned residents to contact U.S. Rep. Betty Sutton and U.S. Sens. Sherrod Brown and George Voinovich to express their opposition.

The theory that medical device manufacturers would sell more products — and earn more revenue — if health care reform passes is flawed, Mixon said.

The uninsured now get treatment through the government or through health care provided by hospitals to the indigent, and there will not be any more wheelchairs sold if health insurance reform passes, Mixon said.

“I assure you there will not be any more gunshot wounds, spinal cord injuries or car accidents,” Mixon said.

If imposed, the tax could cost Invacare an estimated $11 million to $12 million — or the equivalent of its combined $18 million research and development budget and its $6.4 million loss in U.S. sales in 2008, according to figures Mixon provided to Voinovich.

But the proposed device tax is not deductible, so Mixon said Invacare would have to earn $15 million to $16 million to pay the federal, state and city taxes in order to earn the $11 million to $12 million.

Overall, the company reported 2008 earnings of $38.6 million — all made outside of the United States.

“How am I going to pay this tax?” Mixon asked. “We’re already losing money in the United States. We’re going to look at whether we can pass the tax on or cut salaries and benefits.

“It may be we have to shift jobs to Mexico or China,” Mixon said.

Voinovich attacked the tax on device manufacturers in a speech Monday night, saying the health care legislation would impose $28 billion in new taxes on employers.

Voinovich specifically criticized the tax on device manufacturers, saying it could force Invacare to move its operations overseas and that “Ohio cannot afford to lose these jobs to another country at any time but certainly not right now in this struggling economy.”

A spokeswoman for Brown said the version that passed the Senate on Thursday delays collection of the tax from 2010 to 2011.

But Mixon said he hopes it will modified or removed altogether in the final form of the bill to be worked out in coming days in the conference committee of the U.S. House and U.S. Senate. The House version delays the tax until it is collected in 2013, Mixon said.

On the plus side, Mixon said he is pleased that Sutton, Brown and Voinovich are working on the issue.

“They agree with me this tax is very onerous,” he said.

“Congresswoman Betty Sutton has been working very hard to help us,” Mixon said.

Meanwhile, Brown, who voted for the Senate version passed Thursday and Voinovich, who voted against it, released statements in support and opposition.

Brown said the bill “will lower costs for middle class families with insurance, while providing help to 31 million Americans who lack it. And insurers will have to play by a new set of rules, including an immediate ban on pre-existing condition exclusions for children.”

More than 390 Ohioans lose their health insurance every day and small businesses and the self-employed can pay double or triple what large businesses pay for coverage, according to Brown, who said 62 percent of bankruptcies in 2007 were due to medical costs.

“And forty-five thousand Americans die each year because they are uninsured and can’t get the care they need,” Brown said.

But Voinovich attacked the measure as a “two-trillion dollar spending bill rushed through by the Democrats.”

He said it cuts Medicare, raises taxes, increases premiums for health insurance, places additional burdens on states and threatens the health choices that millions currently enjoy.

At a time when Ohio’s unemployment rate is at 10.6 percent, new health care legislation should first do no harm to the economy, Voinovich said.

“Instead, the Democrats are raising taxes by more than half-a-trillion dollars,” Voinovich said. “Paying for health care reform by placing these additional financial burdens on American families and small businesses will further impede our ability to compete in the global marketplace and, ultimately, our economic recovery.

Contact Cindy Leise at 329-7245 or cleise@chroniclet.com.

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