Medical Device Tax At The Forefront Following Midterm Elections
By Nick Otto
With the Senate being swept up in red, many are speculating that aspects of the Affordable Care Act (ACA) will be amended, particularly the highly contested Medical Device Excise Tax.
The day before the 2014 mid-term elections, the Congressional Research Service (CRS) released its report on the 2.3 percent medical device tax, which included an economic analysis of the tax and explained the effects that it would have on the industry.
According to the report, “the medical device tax is one of a suite of taxes on particular industries adopted to finance the Affordable Care Act including fees on drug manufacturers and importers (estimated to raise $34.2 billion over 10 years), and fees on providers of health insurance (estimated to raise $101.7 billion over 10 years).”
In the report, the Joint Committee on Taxation (JCT) estimated that the device tax will raise $29 billion in revenue between fiscal year 2013 and 2022. The JCT estimates that the device tax raised $1.7 billion in fiscal year 2013 alone, amounting to roughly 1.4 percent of the sales of medical devices in the U.S.
Medical device companies have been adamantly lobbying for Congress to repeal the tax, which they say could stifle innovation and kill jobs.
On the contrary, according to the JCT’s report, even in the worst of the scenarios, the device tax would at most cost industry 0.2 percent of industry jobs. In addition, the report stated that, “it is unlikely that there will be significant consequences for innovation.”
Even so, Tuesday’s elections sparked some encouragement in the possible repeal of the tax.
“In the Senate, those who favor repeal include not just many Republicans but also Democrats whose states have large device makers,” according to New Republic. “That includes Minnesota's Al Franken and Amy Klobuchar — plus ... Elizabeth Warren [of Massachusetts].”
According to the Minneapolis Star Tribune, Steve Ubl, AdvaMed president, said that he believes that the White House “‘is not necessarily wedded to the policy,’ and might support repealing the tax either in a stand-alone bill or a broader reform package.”
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