Republican Budgets Call for Device Tax Repeal

If the GOP can get its budget through—a first in nearly 10 years—will the medical device tax finally be repealed?

Industry has been down this road before, but medical device industry supporters in Congress are determined to keep fighting for repeal of the 2.3 percent medical device excise tax that was enacted as part of the Affordable Care Act, a.k.a Obamacare. It tax projected to raise $29 billion in the next 10 years, which would be used to offset costs within the healthcare law, such as the subsidies many people need to purchase health insurance through the federal law.

The Republican budget proposals in both the House of Representatives and the Senate call for device tax repeal. Key votes on the budget are planned on Capitol Hill this week (March 23-27). While medical device tax repeal has been a rare show of bipartisanship in the halls of Congress, it is expected that votes for the final budget resolutions will be along party lines. There are wings within the Republican party, however, that aren’t pleased with all areas of the proposed budgets. Some military hawks have voiced concerns over reduced Pentagon funding, for example, and threatened to withhold their yes vote until funding levels are adjusted. Some more conservative lawmakers are concerned that budget cuts aren’t deep enough to deal with the deficit. So, while the GOP is in the majority, there isn’t total peace in the ranks.

Votes on the competing House and Senate GOP budgets will take up much of this week’s work on the Hill, with both chambers trying to approve the measures before Congress adjourns Friday, March 27, for a two-week recess. Senate Budget Committee Chairman Mike Enzi (R-Wyo.) said lawmakers are working to enact a joint budget resolution by the statutory April 15 deadline.

As far as the device tax repeal goes, industry is bullish on the prospects for repeal.

“AdvaMed commends the House and Senate Budget Committees for creating room in the budget resolution for repeal of the medical device tax,” said J.C. Scott, senior executive vice president of the Advanced Medical Technology Association (AdvaMed). “The tax is a drag on a high-technology, research-based manufacturing sector that provides life-saving, life-enhancing treatments and cures. Every cent paid toward this onerous tax is one that would be better spent on research and development, hiring and capital expansion.

“We applaud the inclusion of this important issue in the budget and encourage the House and Senate to continue prioritizing repeal of this tax on innovation by maintaining the Deficit Neutral Reserve Fund language included in the Senate budget. We appreciate the leadership of the bipartisan group of House and Senate Members including Sen. Orrin Hatch (R-Utah), Sen. Amy Klobuchar (D-Minn.), Sen. Pat Toomey (R-Pa.), Sen. Bob Casey (D-Pa), Rep. Erik Paulsen (R-Minn.), Rep. Ron Kind (D-Wis.) and many others who continue to champion repeal of this harmful tax.”

“Obamacare’s onerous medical device tax has harmed healthcare innovation, stifled job creation, and burdened the delivery of quality patient care,” Hatch said. “Efforts to repeal this tax have received overwhelming bipartisan support in the past, and I couldn’t be more pleased Chairman Enzi has included the repeal of this disastrous tax in his budget. It is time to end this tax so that more resources can be devoted to healthcare innovation—not to the coffers of Obamacare.”

Toomey joined Hatch in leading a bipartisan group of senators to introduce legislation to repeal the medical device tax in both the 113th and 114th Congresses. The House and the Senate have voted at least once to undo the tax, though neither version yielded results. The House has held more than 50 votes to fully repeal the healthcare law, and approved a measure in 2012 to specifically halt the device tax. In 2013, the Senate signaled its support when the provision received a bipartisan—though only symbolic—vote as part of a nonbinding budget resolution. It passed by a vote of 79 to 20.

“The medical device tax must be repealed because it is causing Pennsylvania employers to hold back on expansion plans and the addition of good paying jobs. This tax not only discourages economic growth and drives up medical bills, but it also hurts the patients who stand to benefit the most from American innovation and ingenuity,” said Toomey.