Of All ACA Elements, Medical Device Tax Seems Most Endangered

Three days after the Republican Party gained control of the US Senate and rose to 250 seats in the House of Representatives, the airwaves are filled with bluster aimed at respective bases over what will become of the Affordable Care Act (ACA). While experts from both sides of the aisle agree that a full repeal is unlikely, 1 item has shown up on almost every early list of elements unlikely to survive the next Congress: the medical device tax.

Three days after the Republican Party gained control of the US Senate and rose to 250 seats in the House of Representatives, the airwaves are filled with bluster aimed at respective bases over what will become of the Affordable Care Act (ACA).

While experts from both sides of the aisle agree that a full repeal is unlikely, 1 item has shown up on almost every early list of elements unlikely to survive the next Congress: the medical device tax.

The 2.3 percent sales tax, more precisely called an excise tax by some experts, was included to help pay the costs of the 2010 law and applies to things like surgical gloves, dental instruments, stents, artificial knees and hips, defibrillators, pacemakers, irradiation equipment, and imaging technology. It does not apply to consumer items like eyeglasses and wheelchairs. In 2012, The Center on Budget and Policy Priorities estimated that total industry sales ranged between $106 and $116 billion.

The device industry has never let up in its opposition to the tax, and criticism mounted when early collections fell $300 million short of projections. Critics of the tax say it is threatening jobs, stifling innovation, and could shift jobs overseas in the long term. Economists and policy experts say these fears are overblown and insist that like the pharmaceutical industry, medical device makers profit enormously off minimal innovations rather than major breakthroughs.

Opposition to the tax crosses a unique spectrum in the Senate: everyone from incoming Senate Majority Leader Mitch McConnell to liberal stalwart US Senator Elizabeth Warren, D-Massachusetts, to Minnesota’s 2 Democrats, US Senators Al Franken and Amy Klobuchar, whose opposition reflects hometown advocacy for the state’s 28,500 medical technology workers, include those at industry leader Medtronic.

Because these key Democrats oppose this element but vow to retain other pieces that are more central to the ACA’s staying power, such as the individual mandate, the medical device tax is an obvious bargaining chip in the deal-making that is to come. Since Tuesday night, Republicans have promised to unravel what they can of Obamacare, vowing to go farther than experts predicted in the days leading up to Tuesday’s election. As House Speaker John Boehner, D-Ohio, said Wednesday, “Just because we may not be able to get everything we want doesn’t mean that we shouldn’t try to get what we can.”

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