A group of Democrats in the U.S. House of Representatives recently urged House leaders to pass a bill that would repeal the contentious medical device excise tax before Memorial Day.
In a letter [PDF] written by Rep. Scott Peters (D-Calif.) and co-signed by 17 other Democrats, the lawmakers said that the medical device tax is stunting the research and development of advanced medical technologies. They say that a decline in R&D would, in turn, negatively affect patient care and undermine the future of the U.S. medical device industry — 80% of which comprises companies with fewer than 50 employees.
“The 2.3% tax on revenue, rather than income, means that the U.S. device industry is subject to one of the highest corporate taxes in the world,” Peters wrote. “And many smaller early-stage companies must pay the tax even though they are years away from becoming profitable.”
The letter was addressed to House Speaker John Boehner (R-Ohio), Minority Leader Nancy Pelosi (D-Calif.), Ways and Means Committee Chairman Paul Ryan (R-Wis.), and Committee Ranking Member Sander Levin (D-Mich.).
The signatories urged House leaders to follow through on its previously expressed bipartisan support for H.R. 160 — the Protect Medical Innovation Act — a measure that would repeal the device tax. The bill is sponsored by Rep. Erik Paulsen (R-Minn.) and Rep. Ron Kind (D-Wis).
“This bill has broad bipartisan support from 277 members in the House and timely passage is critical to ensure continued access to innovative medical technology,” stated the letter.
A bipartisan group of Senators led by Sen. Orrin G. Hatch (R-Utah) has a counterpart version that also seeks to repeal what he previously described as an “onerous” tax.
The medical device tax is a crucial funding mechanism for the Affordable Care Act (ACA), also known as ObamaCare. According to The Hill, repealing the provision would cost $26 billion over the 2015 to 2024 period, citing figures from the Center on Budget and Policy Priorities.
There have been a number of proposals to repeal either the whole or portions of ObamaCare. A repeal of the device tax provision has elicited relatively strong support from both parties.
However, the lack of alternative funding to make up for the cost will likely hurt the chances of a repeal. According to The Fiscal Times, the current measure that House Democrats are pushing does not include a way to make up for the approximately $28 billion in revenue that the device tax is expected to collect over the next decade. The White House already indicated that President Barack Obama will veto any medical device repeal that is not revenue neutral.
Medical device industry leaders and groups remain strongly opposed to the tax which they say would stifle innovation, drive up prices, kill jobs, and affect patient care.