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Medical Device Tax Repeal Could End Government Shutdown

 

 

 

It's no secret that there's a strong bipartisan group that wants the Affordable Care Act (ACA) out of the window, but the Obama Administration has, so far, held its ground even the face of the government shutdown entering its ninth day. The Republican party submitted a funding bill to the Senate asking for a one-year delay in the implementation of the ACA and also made yet another push to repeal the 2.3% medical device tax. Last week House Representative Charlie Dent (R-PA) offered up a proposal to end the government shutdown – six months of government funding to the tune of $986 billion in exchange for a repeal of the medical device tax. While Dent says he is opposed to Obamacare, he says he does not believe a government shutdown is the forum to have the debate. Before the shutdown, Dent said in a press statement, “The Medical Device Tax is stupid – and destructive. The Senate should seize this opportunity for a win-win. They can vote to stop a  government shutdown while also preventing the loss of tens of thousands of good-paying jobs for workers across the country.”
 
Dent's proposal has received bipartisan support and the movement to repeal the tax has support from some prominent Democratic Senators like Elizabeth Warren (D-MA), but other Senate Democrats, along with President Obama, have resisted, mostly likely because of the bit of sleight of hand on the part of the proposal. While removing the device tax from the ACA seems like a small compromise at face value, the tax is actually a primary source of funding for Obamacare ( providing an estimated $29-30 billion over the next 10 years). No doubt many opponents of the ACA see a repeal of the device tax as a de-facto defeat of Obamacare. Indeed, much of the criticism laid on the opponents of the tax has been their failure to propose other viable revenue streams that won't add to the already bloated national deficit.
 
On the October 4 episode of HBO's late-night, left-leaning comedic talk show “Real Time with Bill Maher" the titular host questioned how politicians and device companies could view the tax as unfair given the inflated pricing that occurs from manufacturer to patient. Citing an example of a hip replacement that costs $350 to manufacture, has a manufacturers list price of $13,000 (which elicited shocked gasps from the audience), and insurance bills the patient $20-30,000 Maher said “How can you defend that as just the free market? If we're talking about Obamacare is evil because it's socialist, this is not the free market either.”
 
One of Maher's guests, Matt Kibbe, Tea Party member and President and CEO of FreedomWorks, a proponent of "less government, lower taxes and more freedom,” somewhat agreed with Maher, but insists that the effort against Obamacare is about much more than the excise tax and called the push for device tax repeal more of a lobbying effort than anything done in the interest of the American people. “It's not the free market at all. This is a third party system where you have all of these distorted prices based on peoples' ability to lobby the federal government," Kibbe said. “I'm not even slightly interested in getting a repeal of the medical device tax, that's something lobbyists are pushing inside the beltway.” He went on, “But here's the point: in a government-run system the lobbyists and insiders are going to get a seat at the table first and they're going to get their stuff taken care of.” To Kibbe's point, it is worth noting that Dent's state of Pennsylvannia is home to some prominent medical device companies - B. Braun Medical Inc.,Olympus, and OraSure.
 
However, lobbying efforts or not, the longer the government shutdown lasts the more tension and pressure will be placed on both parties to come up with some sort of compromise. At the end of the day the shutdown is about money on the table and with the device tax contributing such a large chunk of revenue, supporters should only expect it to be pulled further into the national spotlight in the coming days.  
 
-Chris Wiltz, Associate Editor, MD+DI
Christopher.Wiltz@ubm.com
 
 
Key issues in the regulatory environment will be discussed at several seminars at MD&M Minneapolis.  Join us there to learn more.
 
Image via Flickr user JayPetey

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The Medical Device Tax is stupid – and destructive. The Senate should seize this opportunity for a win-win. They can vote to stop a  government shutdown while also preventing the loss of tens of thousands of good-paying jobs for workers across the country. Read more

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