The Affordable Care Act's (ACA) 2.3% excise tax on medical device manufacturers was reinstated on Jan. 1.
Get the cheat sheet on the medical device excise tax
About the tax
The tax, which is intended to help fund the ACA, took effect in 2013. However, medical device industry stakeholders and members of Congress have opposed the tax. Congress in 2015 suspended the tax for 2016 and 2017. According to the Associated Press, Congress was expected to abolish the tax before 2018, but did not do so.
Industry, lawmakers eye reprieve
Supporters of the tax argue that the industry has exaggerated the effects the tax had on medical device makers when it was levied from 2013 through 2015. Supporters of the tax also note that other sectors, including pharmaceutical companies and health insurers, pay taxes to help fund the ACA.
But medical device makers are hoping Congress will again suspend or repeal the tax, which they say will cost the industry $20 billion over the next ten years.
J.C. Scott, head of government affairs for the Advanced Medical Technology Association, said money "comes out of funding for product development, research, and the jobs associated with those things," adding, "We fear we will see employment freezes or reductions and a slowdown in the pipeline for medical innovation" as a result of the tax.
Federal lawmakers have been debating whether to include such a provision in legislation to fund the federal government. According to the AP, Congress will have to pass a federal spending measure by Jan. 19 to avert a government shutdown.
In addition, Republican Reps. Erik Paulsen (Minn.) and Jackie Walorski (Ind.) have introduced legislation that would suspend the tax for five years, retroactive to Jan. 1, and House Ways and Means Committee Chair Kevin Brady (R-Texas) has expressed support for the measure. Brady has said he would be "advancing legislation" aimed at health care taxes "in the weeks ahead," the Journal Gazette reports.
According to the Journal Gazette, previous attempts to repeal or suspend the medical device tax have received bipartisan support in Congress. However, some Democratic lawmakers have said they would not support repealing the tax unless the revenue it would generate for the ACA is replaced, the AP reports (AP/Los Angeles Times, 1/1; Kearney, Reuters, 1/1; Francisco, Journal Gazette, 12/30/17).
Here's your cheat sheet for understanding health care's legal landscape
With MACRA, HIPAA, the ACA, and countless others, the health care landscape has become an alphabet soup of legislation. To help you keep up, we've created a series of cheat sheets for some of the most important—and complicated—legal landmarks.
Check them out now for everything you need to know about the Affordable Care Act, antitrust laws, fraud and abuse prevention measures, HIPAA, MACRA, and the two-midnight rule.