Legislation introduced to repeal medical device tax

U.S. Rep. Erik Paulsen (R.Minn.) has re-introduced legislation that would repeal the medical device tax. The 2.3 percent tax has been a prime target for repeal, particularly among Republicans, ever since it went into effect two years ago.

“The medical device tax continues to stifle innovation, cost American jobs, and drive up health care costs despite bipartisan opposition in both houses of Congress,” said Paulsen in remarks accompanying the introduction of the bill. “With over 250 cosponsors day one of the new session, it’s clear repealing this tax should be one of the priorities for the new Congress.”

According to Paulsen the legislation—the “Protect Medical Innovation Act”—has “broad” bi-partisan support with 27 Democrats joining 227 Republicans as cosponsors of the bill.

This is Paulsen’s third try at repealing the tax. Those previous attempts had widespread support in the House of Representatives, but were never brought to a vote in the Democratic-controlled U.S. Senate.

"If you allowed a vote in the Senate [today], it would pass right now," said Paulsen said an interview with Newsmax TV. "But [outgoing Senate Majority Leader] Harry Reid has never allowed that vote to take place. The new Congress and the new congressional leadership will allow that vote to take place, and we're going to put it on the president's desk."

Cynthia Moran, executive vice president, government relations, economics and health policy for the American College of Radiology agreed that there is a lot of bipartisan sentiment in support of the bill and that “on the surface you have to assume it has a better chance of going the distance now with a Republican-run Senate.”

However, Moran pointed out, one fly in the ointment could be that repeal of the medical device tax would result in the loss of $30 billion of revenue over a decade, meaning that lawmakers will have to find ways to pay for the repeal of the tax.

According to a report from Politico, Paulsen believes a plan for offsetting the tax would be worked out either when the bill is considered in the House Ways and Means Committee or Senate Finance Committee.

The Medical Imaging & Technology Alliance (MITA), Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association released a statement applauding the introduction of the new legislation. “Repealing the medical device tax is critical for the United States to maintain its global leadership in this high-tech manufacturing sector and to allocate resources toward the development of new cutting-edge technologies,” said Stephen J. Ubl, President and CEO of AdvaMed in a press release. “This tax on innovation stymies the search for cures and treatments and stalls job creation.”

“Since the tax was enacted, workers have lost jobs and the U.S. economy has suffered,” said Gail Rodriguez, executive director of MITA, in a press release. “It is high time to repeal this tax.”

Individual medical device manufacturers chimed in as well. “This important legislation seeks to repeal the medical device tax—a 2.3 percent excise tax that has had a profoundly adverse effect not only on the medical device manufacturing community but also on patient care since its 2013 inception as part of the Affordable Care Act,” said Gregory Sorensen, M.D., in a statement. “This tax has stifled medical equipment design and innovation, leading to a decrease in hundreds of valuable research-and-development jobs at Siemens Healthcare alone.”

According to an AdvaMed survey of its members at the end of 2013, 14,000 medical technology industry workers lost their jobs as a result of the tax, with a further 19,000 potential jobs lost to forgone hiring. In addition, about a third of the respondents said they had reduced research and development spending as a result of the tax.

But supporters of the tax say concerns about job losses and innovation are overblown, pointing to studies such as the report released by the Congressional Research Service in November that said the medical device tax will result in just a 0.2 percent decrease in device industry jobs and output.