Debate Over Debt Ceiling Deal Brings Up Repeal of Device Tax

In a debate on H.J. Res. 59, the Continuing Resolution, that would raise the U.S. debt ceiling, Senators John McCain (R-Ariz) and Lindsey Graham (R-SC) urged their colleagues to consider an amendment to repeal the 2.3 percent Medical Device Tax. The tax was enacted in 2009 as part of the Affordable Care Act and went into effect this year. Unlike the move to repeal all of the Affordable Care Act (Obamacare), repealing the device tax has bi-partisan support in Congress. In particular, Minnesota Democratic Senators Amy Klobuchar and Al Franken, along with Massachusetts Senator Elizabeth Warren, have advocated for ending the tax. A challenge to getting the device tax repealed is that President Obama has said he would veto such a provision because the device tax helps fund the Affordable Care Act. However, as part of a large deal on a major economic issue like raising the debt ceiling, a repeal would have better odds of getting presidential approval than as a stand-alone measure. “This egregious $30 billion tax has increased health care costs for consumers and takes direct aim at American innovation by punishing the researchers and manufacturers of things like hearing aids, pacemakers, patient monitors, x-ray machines, and artificial hearts,” said Senators McCain and Graham. “Many of these companies have already announced plans to cut as many as 45,000 jobs, and some have canceled plans for company expansions. It is clear that this tax is having a destructive effect on one of the most innovative sectors of the American economy. Elimination of this tax has overwhelming bipartisan support, as the Senate is already on record in support of its repeal by a vote of 79-20 on Senator Hatch’s amendment to the Budget Resolution.” Advocates for repealing the tax include the Medical Imaging & Technology Alliance (MITA), the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association (MDMA). By their measures, medical device manufacturers have already had to pay more than $1 billion in added taxes so far due to this provision in the Affordable Care Act. “The $1 billion threshold is frightening as every dollar spent paying for this medical device tax threatens medical innovation and American jobs,” said Gail Rodriguez, Executive Director of MITA in a July statement on the group’s website. “MITA is pleased to see bipartisan support for repeal of the tax building in both the House and the Senate, but Congress cannot wait any longer to repeal this burdensome tax and protect jobs and essential R&D funding.”