Congress May Finally Kill Obamacare's Medical Device Tax

A bill repealing the Affordable Care Act’s medical device tax advanced from the House Ways and Means Committee to the House floor on Tuesday.

Bills repealing the tax on medical devices, which include everything from artificial hips to heart pacemakers, have passed the House three times in the past without becoming law. But this time, the House bill, sponsored by Rep. Erik Paulsen (R-Minn.), has a companion bill in the Senate. And the Senate version, introduced by Sen. Orrin Hatch (R-Utah), who chairs the Senate Finance Committee, has bipartisan support. In 2013, the Senate, then under Democratic control, passed a non-binding repeal of the tax, but didn't vote on actual repeal.

Congress’ Joint Committee on Taxation estimates that repealing the 2.3-percent tax, which took effect in 2013, would cost $26 billion over a decade. Paulsen’s bill doesn't include a way to replace that lost revenue.

Paulsen told MarketWatch he's optimistic about the bill’s chances, because “there’s new Senate leadership that is interested in bringing the bill forward.”

President Barack Obama threatened to veto a bill repealing the device tax in 2012. In January, he indicated that he would reconsider. “Let me take a look comprehensively at the ideas that they present,” Obama said of proposals to repeal the tax.

Passage would be a victory for the medical device industry and its backers, and a loss for some Democrats and policy advocates who say repeal would weaken the Affordable Care Act.

The tax has been unpopular among some members of both parties, who argue it discourages innovation. Supporters of repeal include progressive Sens. Al Franken (D-Minn.) and Elizabeth Warren (D-Mass.), who represent states with some of the country’s largest medical device makers.

Rep. Sander Levin (D-Mich.), ranking member on the House Ways and Means Committee and a supporter of the tax, said in a statement that the levy is essential to funding the Affordable Care Act without adding to the budget deficit.

Levin argued that Paulsen’s bill would create a slippery slope for other industries to renege on commitments to health care reform.

The bill “would let one sector out of its commitment to contribute to overall reform, which was predicated on increasing demand for its products,” Levin said. “This creates a dangerous precedent for other sectors, especially with no plan to replace that revenue.”



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