Republican control of Senate puts device tax on shaky ground

10/11/2014

With a Republican majority in the Senate, the movement to repeal or seriously amend the device tax, part of the Affordable Care Act (ACA; aka Obamacare) has found a new lease on life. Indeed, the Washington Post has declared medical device makers among the five big winners of the midterm elections, primarily because a repeal of the device tax now has a very good chance of landing on President Obama's desk. Some pundits suggest that he might even not veto it.

The 2.3% excise tax is reviled by many medical device manufacturers. Even those within industry who support the principle of raising revenue to help low- and middle-income Americans purchase health insurance under the ACA take exception with the fact that the tax is levied on sales, not profits. This can be a significant burden to small startup companies that are years away from turning a profit.

As we reported in September 2014, House Republicans have voted more than 50 times to change the Affordable Care Act to no avail. Now with a majority in the Senate, not to mention the support of a handful of Democrats who represent states with a significant medtech constituency (i.e., Minnesota's Al Franken), repeal of the device tax is "low-hanging fruit," writes Sam Baker in the National Journal. "Because it wouldn't strike at the heart of the law, Obama might even sign it," Baker adds.
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