Medical Device Tax Survives as Government Shuts Down

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Last year, the National Center for Policy Analysis (NCPA) referred to the 2.3% medical device excise tax as a “job killing” burden that would also “stifle innovation.” More than a year after the NCPA Issue Brief, the tax lives on.

The hopes of medical device manufacturers and their organizations — including the Medical Imaging & Technology Alliance (MITA), the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association (MDMA) — were raised last week when Senators John McCain (R-Ariz.) and Lindsey Graham (R-SC) said that a repeal of the device tax should be part of the deal to raise the debt ceiling and keep the government open. Unlike many other provisions that were debated, the device tax repeal did have bi-partisan support in the Senate and considerable industry lobbying behind it.

However, in late-night back and forth voting between the House and the Senate over H.J. Res 59, the Continuing Resolution, which authorizes further funding for the federal government, the medical device tax repeal and other provisions attached by the House were stripped out by the Senate.

As October 2013 began, the federal government had shut down with House Republicans so far refusing to budge on demands that provisions of the Affordable Care Act be delayed in return for approval of a government funding bill.

Earlier on Monday, House Republicans received the bill back from the Senate, stripped of all their provisions. Additional political jockeying is not expected to include repeal of the medical device tax, and that may mean that device tax repeal is on the shelf once again, at least for the time being.

In widely reported comments, Senate Majority Leader Harry Reid (D-Nev) specifically called the repeal idea “stupid.” The Associated Press reported that “The Senate will reject any (funding bill) that includes a repeal of the medical device tax.”

And according to NPR News, that is precisely what happened after the Senate convened yesterday afternoon. NPR reported that White House spokesman Jay Carney’s response to a question about whether the president would support a repeal was "Absolutely not."