GOP, Dems Call For Repeal Of $30 Billion Medical Device Tax

A bipartisan group of 180 House members — consisting of about 40 percent of the House — has reintroduced a bill to end the 2.3 percent tax on medical devices that was imposed under President Obama's healthcare law.

That tax took effect at the start of 2013, and is expected to raise a few billion dollars a year in tax receipts for the government, and $30 billion over 10 years. But opponents of the tax say it will hinder innovation and job creation in the medical device industry.

"Placing a new tax on the backs of U.S. medical innovators and entrepreneurs who employ more than 400,000 Americans is not a prescription for economic growth or job creation," said Rep. Erik Paulsen (R-Minn.), who sponsored the bill. "In fact, companies have already laid off thousands of employees as a result of this onerous new tax, and more jobs will be lost now that this tax is in effect.

"It's not only costing our country jobs and deterring innovation, but more importantly, it will reduce patient access to cutting edge medical products and treatments that save lives."

Paulsen introduced a similar bill in the last Congress. The latest version would repeal the tax without offsetting spending cuts.

Last year, the House Ways & Means Committee amended his bill to provide for an offset, something that could happen again in the new Congress. Ways & Means attached language that would pay for ending the tax by requiring the government to recapture all overpayments of health insurance subsidies provided in the healthcare law. Under current law, only some of these overpayments must be returned to the government.

Overpayments of the subsidies are anticipated because the subsidies are based on prior years' income, and if it is discovered later that a family's income increases, some repayment would be required.

This offset led to a veto threat from President Obama, who argued that requiring all overpayments to be returned would be a tax on middle-class families. Republicans rejected the argument that recapturing subsidy overpayments is a tax, and said Democrats have also proposed this kind of offset before.

The House approved the amended bill last summer, in a 270-146 vote in which 37 Democrats supported it. But Obama's veto threat froze the bill in the Senate, which never considered it.

It remains to be seen whether the bill can grow more legs in this Congress now that the tax has taken effect. The effort to repeal the tax has bipartisan support in both chambers — in addition to the bipartisan House bill, H.R. 523, Sens. Orrin Hatch (R-Utah) and Amy Klobuchar (D-Minn.) will introduce a companion in the Senate.

"Repealing the medical device tax eliminates barriers to medical innovation, ensuring patients have access to life saving technologies and reduces the burden on tight R&D budgets, spurring job growth in the industry," said Rep. Ron Kind (Wis.), the leading Democrat on the House bill.

"Supporting and promoting American manufacturing, innovation, and research and development will increase our economic competitiveness and ensure our economy is built to last."

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