July 26, 2018

House votes to repeal ACA's medical device tax

Daily Briefing

    The House on Tuesday voted 283-132 to pass a bill (HR 184) that would repeal the Affordable Care Act's medical device tax.

    According to the Wall Street Journal, all but one House Republican, Rep. Walter Jones (R-N.C.), voted for the bill. A total of 57 House Democrats voted for the bill, and 131 House Democrats voted against it.

    Get the cheat sheet on the medical device excise tax

    About the tax

    The tax, which was 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. Lawmakers then suspended the tax for an additional two years, until 2020, as part of legislation they passed in January to fund the federal government.

    Supporters of the tax argue that the medical device industry exaggerated the tax's effects on medical device makers when it was levied from 2013 through 2015. Supporters also have noted that other sectors, including pharmaceutical companies and health insurers, pay taxes to help fund the ACA.

    But medical device makers have urged Congress to suspend or repeal the tax, saying it will otherwise cost the industry $20 billion over the next 10 years.

    House votes to repeal medical device tax

    The House bill would repeal the ACA's 2.3% excise tax that applies to medical devices that are not sold directly to consumers, such as artificial joints and pacemakers. According to the Journal, the bill would reduce federal revenue by approximately $22 billion over ten years.

    Rep. Erik Paulsen (R-Minn.), who sponsored the bill, said the measure would "revers[e] a harmful tax that is hurting job growth and innovation across the country."

    But some House Democrats said the bill continues a pattern of tax cuts that will lower the amount of money the federal government has to pay for health care programs, the Journal reports. Rep. Bill Pascrell (D-N.J.) said, "We devised the [ACA] so that it would be paid for and we would not have to add to the deficit."

    Bill faces murky chances in the Senate

    The bill now heads to the Senate, where its chances of passage are unclear. According to the Journal, both Republican and Democratic senators in the past have expressed support for repealing the tax. However, senators who support the bill have said they are unsure whether the Senate will consider it this year.

    The Senate would need to approve the bill with at least 60 votes in order for it to pass.

    Scott Whitaker, CEO of the medical device industry group AdvaMed, said, "We know a significant majority of the Senate feels the same way and urge them to quickly take up this measure and eliminate once and for all this drag on one of the country's best hopes for better patient care and economic growth."

    Whitaker has said both Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Chuck Schumer (D-N.Y.) would support bringing the measure up for consideration if the medical device industry can show it has enough support to reach the 60-vote threshold, Politico's "Pulse" reports. Whitaker has said the industry is currently just two votes shy of that threshold, assuming that all Republican senators vote in favor of the bill.

    Whitaker said, "I think it's doable this year. The fact we got 57 Democrats in the House sends a pretty strong signal to the Senate" (Rubin/Andrews, Wall Street Journal, 7/24; Sonmez, Washington Post, 7/24; Sullivan, The Hill, 7/24; Haberkorn, "Pulse," Politico, 7/25).

    Cheat sheet: What you need to know about the ACA

    book

    The Patient Protection and Affordable Care Act, otherwise known as the ACA, is the comprehensive health care reform bill passed by Congress in March, 2010. The law reshapes the way health care is delivered and financed by transitioning providers from a volume-based fee-for-service system toward value-based care.

    Download the ACA cheat sheet to get a quick overview of this significant U.S. health care legislation.

    Get the Cheat Sheet

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