Legislation to Scrap Device Tax Re-Introduced in House, Senate Bill Expected

Just because the 2.3 percent medical device tax went into effect on Jan. 1 doesn’t mean a cadre of lawmakers, mostly from states with large or growing device sectors, have decided to stop efforts to repeal this piece of the Affordable Care Act.

In recent days, a number of politicians, on both sides of the aisle, have recounted their concerns about leaving the tax in place.

One of the loudest voices for repeal continues to be Rep. Erik Paulsen (R-Minn., in photo at left). On Wednesday, Feb. 6., Paulsen, along with Rep. Ron Kind (D-Wis.) re-introduced a bill—the Protect Medical Innovation Act—in the U.S. House of Representatives to repeal the tax. The proposed legislation has more than 175 co-sponsors, including 20 democrats. Similar legislation passed the House last summer by a bipartisan vote of 270 to 146, but was never considered by the Senate.

Similar legislation is expected to be introduced in the Senate, on Feb. 7, by Democratic Minnesota Sen. Amy Klobuchar. The proposal is expected tocome from four Republicans and four Democrats, including Klobuchar and her colleague Sen. Al Franken, also from Minnesota.

Now that a new Congress is in place, it’s back to square one. Even if such a measure were to squeak by in the Senate this time around, it unlikely wouldn’t do so with a veto-proof majority. President Obama told Minnesota Public Radio during an interview last year that he would send any law repealing the device tax back to Capitol Hill, arguing that more patients covered under the Affordable Care Act would mean additional sales for the medical device industry.

But the industry and like-minded lawmakers continue to try.

“The momentum from the last Congress is carrying over with a broader array of champions working to defeat this terrible tax,” said Steve Ubl, president and CEO of the Advanced Medical Technology Association. “On both sides of the aisle, members of Congress know the device tax hurts our economy, kills jobs and slows the march of medical progress needed to fight disease and reduce long-term health costs. The medical technology industry is united in its commitment to repeal this tax and appreciates the leadership shown in Congress to continue the effort.”

Rep. Fred Upton (R-Mich.) is a co-sponsor of the bill. Upton pointed to layoffs at Stryker Corp., which is based in his home state, as an example of how the tax already has been harmful to the economy.

“Only a month since its implementation and we have already witnessed the devastating impact that this harmful new tax is having on manufacturing jobs and innovation here in Michigan and around the country,” Upton said. “These are dollars that could be better spent on creating local jobs and making critical investments in life-saving technologies. The president has promised to do whatever it takes to move our economy forward and protect struggling middle class families. Repealing the device tax would be a good step in that direction.”

Paulsen wants to make sure that industry, the public and his fellow lawmakers for whom this isn’t an issue remember that the tax affects all companies, and this isn’t an issue of big companies complaining about smaller margins and shrinking executive bonuses.

“It’s not just the larger companies like Medtronic or Boston Scientific—there are 400 of these small companies, medical technology companies in Minnesota, that will be impacted by the new tax, It’s a $30 billion tax that will hit Minnesota pretty hard,” Paulsen told the Fox News affiliate in Minneapolis-St. Paul. “This tax is not a tax on profit for companies, this is a tax on their sales, on their revenue, and for medical device companies it takes 10-15 years to achieve profitability, so it is the time to push the panic button.”

He also framed the cause for repeal within a larger discussion about corporate tax reform.

“The odds are more difficult, no doubt, because it’s already law. This is about keeping good, domestic manufacturing jobs here in the U.S., not shipping them overseas, and that’s a part of the larger tax conversation that needs to happen as well,” Paulsen said. “So this year—late spring, early summer—we need action.”

Eric Cantor, House majority leader, (R-Va.) also has thrown his weight behind calls to scrap the tax. During a speech at the conservative American Enterprise Institute on Feb. 5 in Washington, D.C., Cantor told the audience the tax was going to cost American families more and would make “access to quality healthcare and innovation tougher.”