Medical device tax is back; industry seeks repeal

January 3, 2018 GMT

Medical device tax is back; industry seeks repeal

WASHINGTON - Like a medical condition that won’t go away, a controversial Affordable Care Act tax on medical device manufacturers was reinstated on Jan. 1 despite repeated drives to end it for good.

The 2.3 percent excise tax was placed on makers of devices like catheters and artificial joints with the goal of raising $29 billion over 10 years to cover some of the costs of providing Obamacare medical insurance to previously uninsured Americans.

The medical device industry protested the tax, saying it would cost jobs and threaten medical innovation. Supporters of the tax argue it’s fair to tax the industry because the law’s expanded insurance coverage increased the market for medical devices and boosted sales. They also say repealing the tax would increase the federal deficit. The Obama administration strongly objected to rescinding it.

New Congress will prioritize repeal of Obamacare medical device tax

Congress voted to suspend the tax for 2016 and 2017, but efforts to end it permanently fizzled last year when the Republican drive to repeal the Affordable Care Act fell short.

Now, the $150 billion-a-year medical device industry is lobbying to repeal the tax in a funding bill that Congress must pass by Jan. 19 to avoid a government shutdown, says Advanced Medical Technology Association spokesman Greg Crist. He says Ohio companies who are members of his group employ more than 4,400 workers in the state. Those companies could better use the money to research new products that could save lives, he says.

Medical devices mean new jobs, new businesses & new exports. But more importantly, they mean hope for patients. Learn more from this @MorningConsult op-ed by our VP for policy & advocacy, Ellie Dehoney. https://t.co/yjpiAftjmn #RepealDeviceTax— ResearchAmerica (@ResearchAmerica) November 28, 2017

Crist said members of his trade association - whose 31 Ohio members include companies like Mentor’s STERIS and Columbus’ Cardinal Health - are planning a “call to action” to secure the tax’s repeal in the upcoming bill. The group sent a letter to President Donald Trump and ran ads on television shows he watches, like “Morning Joe” and “Fox and Friends,” said Crist.

“We have a golden opportunity to boost a sector that employs over 2 million Americans and creates technology to save lives and improve lives,” said Crist, who argues that free-standing repeal bills in Congress have enough bipartisan support for passage. “Let’s get this done.”

House votes to repeal medical device tax, Obama threatens veto

Spokesmen for Cardinal Health referred questions on the tax to Crist, and STERIS representatives did not respond to requests for comment.

In a statement released by Crist’s group, Robert Schmidt, the founder and chairman of Cleveland Medical Devices Inc., which makes home monitoring equipment for patients with sleep apnea, said the tax’s suspension freed up money his company spent on “R&D and growth.” The head of a Columbus-area company called Minimally Invasive Devices, Wayne Poll, said his firm hired additional sales representatives with the money it saved when the tax was suspended.

Although the tax was officially reinstated on Jan. 1, Crist said the law doesn’t require medical device companies to start sending money to the government until Jan. 29.

“We are hopeful we can get this repealed or suspended before then,” he said.