Government Shutdown May Help Get Device Tax Repealed

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Health care lobbyists tell Washington, D.C., news source The Hill that they are close to winning a repeal of the 2.3% medical device excise tax included in the Affordable Care Act (ACA), and the mounting pressure on both parties to compromise on a government funding and debt ceiling deal may be working in their favor.

“We are laser focused on the need to have the device tax repealed,” said JC Scott, AdvaMed’s senior executive vice president of government affairs in The Hill article. “We feel now is the right time, and we are focused on every avenue to get that accomplished.” 

In an hour long press conference Tuesday, the president said that he would negotiate if a clean (i.e., no extra provisions such as de-funding the ACA) short term government funding package was passed by the House. Senate Democrats, perhaps with an eye on their own re-election chances, want a longer funding package that sees the government through the midterm elections.

However, whether it is a short or a long term deal, the pressure for both parties to negotiate and find compromises that can keep the government running is growing, and among issues that could be compromised upon, the device tax repeal stands out for its relatively rare bi-partisan support.

Many members of congress from both parties have device manufacturers based in their district, and local politics often trumps national agendas in Congress.

Minnesota Democratic Senators Amy Klobuchar and Al Franken have co-sponsored legislation to end the tax, both in this session of congress and in the last one. The Twin Cities of Minneapolis and St. Paul are heavily dependent on the medical device industry with major companies like Medtronic and St. Jude Medical based there.

Likewise, Senator Elizabeth Warren (D-Mass.) has the headquarters of Boston Scientific in her home state and came into Congress pledging to support the tax’s repeal.

Opposition to the bill by the White House and most Democrats, including Senate Majority Leader Harry Reid (D-Nev) rests primarily on that repealing the tax would de-fund the ACA, something they say they absolutely will not do. However, given a repeal proposal that proposes a different way to fund the ACA, they might consider it, noted NPR in a report. According to the NPR, that is just what happened in the passage of the ACA when the pharmaceutical industry agreed on provisions that would save the government $80 billion over 10 years in exchange for relief from provisions they deeply disliked, such as legalizing drug imports that could undercut their profits. There is no excise tax on pharmaceuticals, NPR helpfully noted.