Proposed federal legislation to repeal the medical-device tax has resurfaced with bipartisan support in both chambers of Congress. Republicans have signaled that repealing the 2.3% excise tax, a source of funding for the Patient Protection and Affordable Care Act, is a top priority now that they control both the House and the Senate.
Sen. Orrin Hatch, the new chairman of the powerful Senate Finance Committee, Tuesday introduced a repeal bill in the Senate. Other sponsors include Democratic Sens. Al Franken and Amy Klobuchar of Minnesota, Joe Donnelly of Indiana, Bob Casey of Pennsylvania and Jeanne Shaheen of New Hampshire.
“Every dollar medical-device manufacturers spend on this onerous tax is a dollar taken away from American innovation, job growth and the ability to provide groundbreaking medical technologies to patients in need,” Hatch said in a statement.
Last week, Rep. Erik Paulsen (R-Minn.) introduced a repeal bill in the House. That legislation has already attracted 258 co-sponsors, including 29 Democrats.
The medical-device tax is projected to raise roughly $30 billion over a decade. But a report released in August by the U.S. Treasury Department's inspector general found that it was falling short of revenue projections by roughly 25% because companies aren't paying it.
Repealing the device tax would likely stoke calls for getting rid of other taxes included in the ACA. In particular, some business groups and labor unions have been calling for repeal of the so-called “Cadillac tax,” which will be assessed on generous employer-based health plans starting in 2018. And America's Health Insurance Plans, the main industry group, wants the tax on insurers rescinded.
Those revenue sources help pay for financial assistance for households with incomes up to 400% of the federal poverty level and the Medicaid expansion that are key components of the federal healthcare law.
A study released by the Advanced Medical Technology Association, the main industry group for device manufacturers, found that the tax had resulted in the loss of 33,000 jobs since taking effect at the start of 2013. But an analysis by the nonpartisan Congressional Research Service released in November found that the financial impact of the tax is likely to be negligible.
President Barack Obama hasn't indicated whether he would veto legislation repealing the medical-device tax if it ends up on his desk.
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