medical device tax
Republican legislation that looks to dismantle and replace Obamacare is facing serious opposition from many angles, including from hardline conservatives and the American Medical Association.
Republican U.S. House of Representatives leaders yesterday released their new legislation which looks to eliminate Obama’s Affordable Care Act, including the medical device tax.
The plan would also eliminate more than $500 billion in federal revenue, according to the Joint Committee on Taxation. The committee estimated that a delay of the “Cadillac tax” on high-cost health plans, set to go into effect in 2020 and delayed to 2025, would cost an estimated $48.7 billion in tax revenue.
A repeal of the 2.3% medical device tax would cost $19.6 billion over 10 years, the committee said. In addition, repealing the tax on brand pharmaceutical companies would cost $24.8 billion, repealing the health-insurance tax would cost an additional $144.7 billion. Repeal of the 10% indoor tanning service would cost $600 million.
Image Credit: MassDevice
A plan to repeal and replace the Affordable Care Act floated by Republicans yesterday – which critics have already dubbed “Trumpcare” or “Obamacare Lite” – would permanently repeal the medical device tax effective Jan. 1, 2018.
A hold on the 2.3% tax on U.S. medical device sales went into effect at the beginning of 2016 and is slated to expire by the end of this year. The legislative plan released last night by GOP members of the U.S. House of Representatives would kill the tax for good effective Jan. 1, 2018.
The House GOP plan would also immediately remove the penalty for people who do not have health insurance and halt the expansion of Medicaid at the beginning of 2020, capping funding for the federal healthcare program for the poor. It would preserve a pair of popular Obamacare features: Allowing children to remain on family health plans until age 26 and barring insurers from denying coverage for pre-existing conditions.
Image Credit: MassDevice
Devicemakers have long complained that their business has been negatively affected by an excise tax placed on their devices by the Affordable Care Act. A think tank has now crunched the numbers on how the tax affected U.S. jobs.
The 2.3% tax on medical device sales resulted in the loss of over 28,000 jobs among devicemakers and and related industries when it was in effect between 2013 and 2015, according to the American Action Forum, which describes itself as a “center-right policy institute.” Health economist Robert Book based his post on U.S. Census Data and tax data from the federal government.
The tax, which is collected as a direct percentage of manufacturer sales, was suspended by Congress for 2016 and 2017. If Congress allows it to resume in 2018, AAF projects that an additional 25,000 additional jobs could be lost by 2021. AAF’s prediction is based on past job losses and lower-than-anticipated tax revenue, which would suggest a reduction in device sales.
When the medical device excise tax was in effect, the med tech industry lost nearly 29,000, or 7.2%, of its jobs, according to an AdvaMed analysis of Department of Commerce figures. The drop occurred between 2012, the year before the tax was enacted, and 2015, when it was suspended in a tax and spending bill.
“These numbers reveal just how devastating of an impact the device tax had on our industry and underscore the urgent need for permanent repeal,” said AdvaMed CEO Scott Whitaker, in a statement. “At a time when American device manufacturers are ready to grow and create jobs, the best message this Congress and the Administration can send is through a full and permanent repeal.”
Image Credit: FierceBiotech
From tax breaks to Obamacare repeal, medtech companies are likely due to experience major changes under President Donald Trump. The situation, though, remains unpredictable.
“I don’t think that there has been a scenario, not since I’ve been a professional and in politics, where we really know so little about exactly what the key priorities are that are going to impact our industry,” Shaye Mandle, president and CEO of the Medical Alley Association in Minnesota, recently told MDO.
Image courtesy of Zach Rudisin, CC BY-SA 3.0
Congressional legislation was introduced today looking to permanently repeal the medical device tax.
The Protect Medical Innovation Act of 2017, sponsored by Rep. Erik Paulsen (R.-Minn.) and Ron Kind (D-Wis.), seeks to repeal the 2.3% medical device excise tax that was enacted as part of the Affordable Care Act.
The tax, a levy on all U.S. sales of prescribed medical devices, was suspended for 2 years last December through another bill sponsored by Paulsen.
“One of the best ways to protect American manufacturing, spur innovation, and make sure the latest and best medical technology is affordable for patients is to repeal this burdensome tax. We are already seeing new American jobs and increased investment in research and development as a result of the temporary suspension of this tax,” Paulsen wrote in a statement, according to KSTP News.
When Donald Trump takes over as president on Jan. 20, one of the first business tax breaks he delivers is likely to go to the U.S. medical device industry and companies like Mark Throdahl’s.
The chief executive of OrthoPediatrics Corp, based in northern Indiana, said his company has been able to hire more workers since the temporary suspension effective last January of a federal tax on medical devices. The tax was imposed as part of outgoing President Barack Obama’s signature 2010 healthcare law.
Throdahl said he hopes the incoming Republican-led Congress and president will permanently repeal the tax.
Trump and U.S. lawmakers are likely to do that, according to lawmakers, lobbyists and industry executives, in a step that also would help larger medical device makers such as Medtronic Inc, Boston Scientific, St. Jude Medical Inc and Johnson & Johnson.
By Nick Carey &