Congress Takes Aim at the Device Tax

The long-running fight to repeal the 2.3% medical device excise tax has taken center stage with a new Republican-led Congress in session and the introduction of  bills in both chambers to kill  it.

The tax, designed to help fund President Obama’s Affordable Care Act, has opponents on both sides of the aisle, particularly in states that are home to large medical device companies. Long-time opponent Rep. Erik Paulsen, R-MN, has introduced legislation to get rid of the tax. HR 160, the Protect Medical Innovation Act, had 260 cosponsors as of Jan. 14, including 29 Democrats.  Rep. Ron Kind, D-WI, is a key ally in the fight. The two introduced similar legislation in the last session of Congress that enjoyed significant support among House members. 

“The medical device tax continues to stifle innovation, cost American jobs, and drive up health care costs despite bipartisan opposition in both houses of Congress,” said Paulsen in a prepared statement. “With over 250 cosponsors day one of the new session, it’s clear repealing this tax should be one of the priorities for the new Congress.”

Meanwhile, on the Senate side, 15 lawmakers have joined Sen. Orrin Hatch, R-UT, in co-sponsoring S. 149, theMedical Device Access and Innovation Protection Act. The bill also enjoys bipartisan backing, with five Democrats lending their support. Sens. Amy Klobuchar, D-MN, and Al Franken, D-MN, whose state is home to device makers Medtronic and St. Jude Medical, as well as the conglomerate 3M, are two vocal opponents of the tax who have rejoined the fight.

“We are committed to repealing the job-killing Obamacare medical device tax, a tax on life-saving medical devices like pacemakers and insulin pumps,” said Sen. John Thune, R-SD, in a Jan. 6 opinion article that appeared on the CNN website. “This tax has already eliminated thousands of jobs in the medical device industry, and it's on track to eliminate thousands more if it isn't repealed.”

In a joint statement, medical device trade groups AdvaMed, Medical Imaging & Technology Alliance (MITA), and the Medical Device Manufacturers Association heralded the legislation.

“We encourage leaders in Congress and the administration to seize on the momentum for repeal of this harmful tax that stifles innovation,” said Gail Rodriguez, executive director of MITA. “Since the tax was enacted, workers have lost jobs and the U.S. economy has suffered. It is high time to repeal this tax.”

Some groups and lawmakers have disputed the predictions of large job losses made by the device industry. A November analysis by nonpartisan Congressional Research Service determined that the drop in U.S. output and jobs for medical device manufacturers will be no more than 0.2%. In response, AdvaMed called the analysis “fundamentally flawed.” Previously, the group said that the industry lost 33,000 jobs in the first year the tax was in effect.