AGA Applauds Senate Amendment to Repeal Medical Device Tax
The Senate is in the midst of debating their fiscal year (FY) 2014 budget resolution, which sets a blueprint for spending priorities. The resolution has nearly 130 proposed amendments. The Senate approved by a vote of 79-20 an amendment sponsored by Sen. Orrin Hatch, R-UT, that would repeal the medical device tax. AGA opposes this tax, which was implemented on Jan. 1, 2013, as part of the Patient Protection and Affordable Care Act (PPACA). There is bipartisan support to repeal the 2.3 percent excise tax on medical device companies, which is estimated to generate approximately $30 billion over 10 years to help finance the health reform law. However, opponents of the tax, like Sens. Hatch and Amy Klobuchar, D-MN, have argued that it will have a devastating impact on this emerging industry and implementation will cost — at a minimum — tens of thousands of jobs. There have already been reports of device companies cutting jobs in anticipation of the impact of the tax. Most importantly, the tax could limit patients’ access to emerging technologies and the cost of implementing the tax will inevitably be passed on to consumers.
The AGA applauds the passage of the Hatch amendment, even though it is merely a symbolic gesture since budget resolutions are non-binding documents. The House passed its own budget resolution crafted by Budget Chair Rep. Paul Ryan, R-WI. It reflects Rep. Ryan’s philosophy of reforming Medicare to a premium support program, block granting Medicaid, cutting spending and lowering tax rates. It does not include the device tax repeal. The Senate has already rejected the House resolution and will not likely try to reconcile their differences. The House, which did pass legislation sponsored by Rep. Erik Paulsen, R-MN, that repeals the device tax, will likely try and move that legislation again this year either as a stand-alone bill or as part of a tax reform package.
The AGA will continue to advocate for the repeal of the medical device tax, which will not only hurt patients’ access to groundbreaking technologies, but also hinder innovation of emerging GI device companies. Look for more updates on the budget process and other policy issues impacting gastroenterology on the AGA Washington Insider.