(Updated below)Representative Erik Paulsen (R-MN) is back at work trying to eliminate the 2.3% excise tax that medical device companies are set to pay as part of last year’s healthcare reform act.

January 27, 2011

4 Min Read
Paulsen Introduces Bill to Repeal Excise Tax on Device Makers (Updated)

Paulsen introduced the Protect Medical Innovation Act on Tuesday, a bill that would do just that. Last year, Paulsen introduced the Defend Medical Innovation Act, which would have accomplished the same thing had it been able to pass before the end of the congressional session. This year’s Protect Medical Innovation Act has 41 cosponsors; Orrin Hatch (R-UT) introduced will introduce companion legislation in the Senate.

Paulsen’s current bill may be flying a bit under the radar so far, slightly overshadowed by both President Obama’s State of the Union address and Republicans’ broader attempts to repeal the so-called “jobs-killing” healthcare reform act, but I’m guessing it’s no less relevant to medical device makers. The tax is expected to draw about $20 billion from medical device companies over 10 years, with apocalyptic effects, to hear industry representatives, Paulsen, and Hatch tell it. (Is it any coincidence that the tax will take effect in 2013, or just after 2012?)

However, when it’s all said and done, Paulsen’s bill may represent just another move in the Republicans’ never-ending chess match with Democrats for the hearts and minds of potential voters. According to Greg Sargent at the Washington Post, the bill may be part of a Republican strategy to force Democrats to vote in favor of “job-killing” provisions of healthcare reform. I’m guessing that Paulsen, who cochairs the congressional Med Tech Caucus, is sincere in his desire to help the industry. But in the end his bill may end up doing more to protect his party than it does to protect medical innovation.

If that happens, and Paulsen’s bill ends up achieving nothing but political gain for Republicans, will you feel like industry was ultimately used? Or do you believe that Paulsen’s efforts stand a chance of making a difference? Moreover, do you see the tax being as destructive as Paulsen does? Or, for whatever reason, are you not as worried about it?

Update (Friday):

According to The Hill, Hatch officially introduced his bill to repeal the tax in the Senate on Thursday, with Senators Richard Burr (R-NC), Tom Coburn (R-OK), and John Cornyn (R-TX) cosponsoring. Hatch's press release on the bill, which screams, "HATCH CONTINUES ALL-OUT PUSH TO TAKE DOWN FATALLY FLAWED $2.6 TRILLION HEALTH LAW," pretty much confirms that efforts to repeal the excise tax are just one part of a broader strategic fight against Democrats over healthcare reform, as Greg Sargent asserted in the post I linked to above. In conjunction with the Medical Device Access and Innovation Protection Act, Hatch also introduced bills that would repeal the individual mandate and employer mandate sections of the healthcare reform act. 

AdvaMed president Stephen Ubl, meanwhile, joined MDMA in cheering on efforts to repeal the tax, according to a statement quoted in the article. However, unlike MDMA, Ubl notably maintained a commitment to "the central elements of health reform that are consistent with our long-held principles, including expanded coverage, reform of the payment system to encourage quality and efficiency, and a new emphasis on health promotion and disease prevention." 

Neither Hatch, Paulsen, nor AdvaMed have suggested how to pay for healthcare reform without the excise tax on device makers. I wouldn't expect Hatch or Paulsen to do so, given that they are not in favor of the healthcare reform act at all (though repealing that act would reportedly increase the federal deficit, according to estimates by the nonpartisan Congressional Budget Office). AdvaMed's position, though, seems to a bit tough to reconcile. How can the group simultaneously be in favor of healthcare reform and argue for partially defunding it without proposing an alternative revenue source? Some of you may remember that this issue has come up before; the excise tax reportedly originated after lobbyists for the device industry suggested taxing hospital-purchasing groups to pay for healthcare reform rather than volunteering to eat some of the cost, according to the Wall Street Journal.  

So again, how do you feel about all of this recent political wrangling? If, like AdvaMed, you support healthcare reform but don't like the tax, how then would you propose that government pay for healthcare reform? If, on the other hand (and I imagine that a solid majority of you reside firmly on the other hand), you are against healthcare reform in general, how do these efforts to repeal the excise tax strike you? Given that the healthcare reform act is unlikely to be repealed, at least for the foreseeable future, by a Senate with a Democratic majority, and given that the excise tax is probably similarly unlikely to be repealed, do you feel like Republicans are exploiting industry's cause to support their greater political goals? Or is this a fight worth fighting? 

— Thomas Blair

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