The medical device sector and Congress
One Industry’s Hold on the Senate
By THE EDITORIAL BOARD, NYT
Ever since Congress included a 2.3 percent tax on medical devices in President Obama’s health care reform law in 2009, there has been a forceful and well-financed campaign to repeal the tax — waged, naturally, by the medical device industry. It has donated generously to lawmakers and candidates, taken them on tours of their plants and spent tens of millions in lobbying.
The effort is paying off. Last month, the Senate voted 79 to 20 to repeal the tax, even though the money is crucial to providing health coverage to the uninsured.
The vote was not binding, part of a parade of “message” amendments to the 2014 budget resolution designed to show a sense of the Senate. But the overwhelming majority in favor of the industry — which included 34 Democrats — means that a serious attempt at repeal is probably inevitable and shows how easy it is for a concerted lobbying effort to bring even liberal senators like Elizabeth Warren and Al Franken to an industry’s side.
The tax, which applies to devices like artificial joints, pacemakers, wheelchairs and gloves, is expected to raise about $29 billion over 10 years. It is one of several sources of new revenue in the health care law that will pay for the expansion of health coverage to 30 million uninsured people, many of them poor. The industry claims the tax will hurt demand for its products, but, in fact, sales of these devices, which are not purchased directly by consumers, are unlikely to be affected by price, especially by a small tax increase. As more people receive health coverage that pays for devices, the industry will more than make up the cost of the tax.
(More here.)
Ever since Congress included a 2.3 percent tax on medical devices in President Obama’s health care reform law in 2009, there has been a forceful and well-financed campaign to repeal the tax — waged, naturally, by the medical device industry. It has donated generously to lawmakers and candidates, taken them on tours of their plants and spent tens of millions in lobbying.
The effort is paying off. Last month, the Senate voted 79 to 20 to repeal the tax, even though the money is crucial to providing health coverage to the uninsured.
The vote was not binding, part of a parade of “message” amendments to the 2014 budget resolution designed to show a sense of the Senate. But the overwhelming majority in favor of the industry — which included 34 Democrats — means that a serious attempt at repeal is probably inevitable and shows how easy it is for a concerted lobbying effort to bring even liberal senators like Elizabeth Warren and Al Franken to an industry’s side.
The tax, which applies to devices like artificial joints, pacemakers, wheelchairs and gloves, is expected to raise about $29 billion over 10 years. It is one of several sources of new revenue in the health care law that will pay for the expansion of health coverage to 30 million uninsured people, many of them poor. The industry claims the tax will hurt demand for its products, but, in fact, sales of these devices, which are not purchased directly by consumers, are unlikely to be affected by price, especially by a small tax increase. As more people receive health coverage that pays for devices, the industry will more than make up the cost of the tax.
(More here.)
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1 Comments:
Walz, Franken, Klobuchar, et al should listen to Paul Stein, president at SoCal Preclinical Services: “Just because many blame Obamacare and the 2.3% excise tax for the layoffs doesn’t make it the actual cause. Having been employed at companies like Medtronic and St. Jude Medical for 22 years, I would think, instead, that increasing recalls, worse quality systems, few new products and overpriced and poorly thought-out acquisitions finally have come home to roost.
This is a sell-out by Tim Walz, Al Franken and Amy Klobuchar … appeasing the Medical Device Industry’s paid-report that “suggested” job losses … which have difficulty to find since the tax has started to be collected. In fact, two companies that Erik Paulsen has cited for job losses (Smith & Nephew and Covidien) have stated that the job reductions have had nothing to do with the excise tax. Further, surveys indicate that companies will increase prices (as is done with other products that excise taxes are levied -- 11% on firearms) or absorb the cost increase … this survey states only 11% will terminate employees … but now that 41% of their competitors are raising prices, why would they ?
Any repeal today would mean that companies just found a way to increase prices without anyone noticing.
IF they really feel that this tax is so bad, and want it repealed, then to replace the lost revenues, they should approve Dan Maffei / Jared Polis bill which would eliminate tax deductions for domestic oil production, a move that would save a projected $9 billion between 2014 and 2023; an additional $14 billion during the period by ending tax deductions that companies take for the oil most recently added to their inventories. Maffei's legislation also would ban oil companies from claiming foreign tax credits worth about $6 billion against royalties paid to foreign governments for the right to extract oil on their land.
IF the concern is that "small business will suffer", than allow an immediate tax rebate on the first $500,000 in applicable sales ...
The only point of concern that I would have with the OpEd is the reference to "gloves" being taxed ... there are many exceptions such as latex gloves sold over the counter or sold for other uses other than medical would be exempt ... the only "glove" that would be taxed would have to be classified as a "durable medical equipment" ... I don't think that there are many that would apply.
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