White House threatens to veto repeal of medical device tax

posted at 7:21 pm on June 6, 2012 by Erika Johnsen

It is a truth universally acknowledged that, if you want to discourage a certain behavior, you can put a tax on it. (Note: I am in no way endorsing said policy, just pointing out that when you put a tax on something, you can reliably predict that you’ll get less of it.) So, one would assume that through the oh-so-august auspices of the Patient Protection and Affordable Care Act, which include a forthcoming tax on the medical device industry, President Obama is trying to discourage… uh, medical device innovation? Gee, how nice.

Rep. Erik Paulsen (R-Minnesota) is one of the Congressmen leading the charge in getting rid of this little innovation-discouraging surprise contained within ObamaCare, and he’s got plenty of bipartisan support for the bill up for a vote this week. He and Rep. Jason Altmire (D-Pennsylvania) took to The Hill‘s blog to make their case:

In less than seven months, on January 1, 2013, a new tax on medical device companies (part of the Patient Protection and Affordable Care Act) is set to steamroll American leadership in medical innovation. The 2.3% excise tax will be levied on all types of medical devices, from heart stents and pacemakers to MRIs and ultrasounds. Because the new tax is on revenue, not profit, a small company that is not yet in the black would bear the biggest brunt. This tax will hit medical device companies especially hard in states that are leading the way in medical innovation; states like Pennsylvania, Minnesota, California, New York, and Massachusetts.

After touring many device companies, both large and small, we know that this impending tax may force companies to cut jobs, reduce investment in R&D, move overseas, or even shut down completely. This is the worst possible outcome not only for American jobs and American innovation, but also for the patients who might not have access to a new medical device or a new technology that could save their lives.

The bill has a good chance of making it through the House, but Harry Reid’s office has indicated the Senate will not take up the legislation, and the White House has already issued their veto threat.

White House officials threatened a veto Wednesday of a Republican bill that would repeal a tax on the makers of many medical devices sold in the U.S., in the latest partisan clash over President Barack Obama’s health care overhaul. …

The device industry is getting a potential 30 million additional customers who eventually will gain medical insurance due to the health care overhaul, the White House said in its letter warning of the veto.

“This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion,” the White House said.

Industry officials insist they won’t gain extra customers, arguing that elderly people who use many of their products are already insured under Medicare.

For another explanation on why this tax would be so devastating, check out this piece from Forbes today — this tax will not only seriously undermine our ability to compete, but could make health care a lot more expensive for a lot of people, to boot (come on, SCOTUS, do the right thing!).

My colleague Robert Book has written a compelling analysis of Obamacare’s medical-device tax, which concludes that it will destroy about 14,000 and perhaps up to 47,100 jobs. The 2.3 percent excise tax on medical devices is a savage blow to innovation. Note that this tax is on sales, not profits. It cuts into the top line, not the bottom line. If not repealed, this tax will start hitting medical-device makers on January 1, 2013.

Another colleague, Benjamin Zycher, has come at the tax from a different angle: In an analysis that concludes that the tax will lead to a reduction in research and development by about $2 billion every year, Zycher estimates how many patients will suffer early deaths because of the throttling of innovation.


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November 6 cannot come soon enough.

Sporty1946 on June 6, 2012 at 7:24 PM

Tax….tax…tax!

KOOLAID2 on June 6, 2012 at 7:24 PM

That’s OK, because we are about to repeal BO.

phxconservative on June 6, 2012 at 7:24 PM

That pic makes him look like a bitter clinger of 0bamacare…

OmahaConservative on June 6, 2012 at 7:27 PM

Why does Obama hate sick people?

ButterflyDragon on June 6, 2012 at 7:27 PM

Give it your best shot, dimwits, the People are awake, and paying attention.

waterytart on June 6, 2012 at 7:29 PM

Even our liberal paper did a piece on this because of a local doctor who’s developed a medical device.

The Dems are out of their minds to not repeal this tax.

INC on June 6, 2012 at 7:30 PM

One of my close friends is in the medical device business. He detests what the Gov is doing to his firm. They have two devices that have been awaiting approval forever. Taxing them adds insult to injury. Gee I wonder where the expensive nature of things comes from. R&D, sure, the Feds, absolutely.

Bmore on June 6, 2012 at 7:30 PM

Sweet, so Republicans can support this, Democrats can oppose it, then the Supreme Court can toss ObamaCare, while everyone who has anything to do with the Medical Device industry becomes big fans of Republicans.

Works for me. Thanks BO!

Greg Q on June 6, 2012 at 7:30 PM

This seems incredibly stupid. This isn’t some obscure topic. It makes for a political ad in the fall. One that people will relate to. Why is Obama choosing to fight on this hill?

amerpundit on June 6, 2012 at 7:30 PM

I can’t wait until the DOJ, the EPA, the treasury, the DOE, General Motors, and ALL the obamao cronies are cleaned out of Washington forever. And that absolute moron Harry Reid is kicked out….. He needs a smack in the nose, that’s what he needs.

ultracon on June 6, 2012 at 7:31 PM

It is a truth universally acknowledged that…

Heh. Jane Austen.

aquaviva on June 6, 2012 at 7:31 PM

Hey now, let’s be fair. We can’t have all those sick people living long lives. They’d collect Social Security, and we all know the Dims spent that a long time ago.

Why else do you think they passed Obamacare?

avgjo on June 6, 2012 at 7:34 PM

I pray this piece of crap is dismantled otherwise I won’t be able to afford another new hip when I need it in a few years.

txag92 on June 6, 2012 at 7:35 PM

This seems incredibly stupid. This isn’t some obscure topic. It makes for a political ad in the fall. One that people will relate to. Why is Obama choosing to fight on this hill?

amerpundit on June 6, 2012 at 7:30 PM

You’re right. This is prime ad material. I can’t imagine the kind of bubble he lives in.

INC on June 6, 2012 at 7:37 PM

If or if not bho veto’s this medical device bill, the 24/7 tv ads from lawyers ‘if this or that happened with this device, call us and you will get $’? This goes for any and all drugs from the lawyers as well? You think any company wants to invest in any new product with hanging over their heads if on single person ‘has issues’ with said product?

I have long ago dumped all medical and drug stocks because of the lawyers cratering the stock on one or two people with ‘issues’.
L

letget on June 6, 2012 at 7:38 PM

Why do they even have this bill, if the whole thing might be thrown out anyway? Tells me Obamacare might be around a lot longer than people expect.

rickv404 on June 6, 2012 at 7:38 PM

It is a truth universally acknowledged that, if you want to discourage a certain behavior, you can put a tax on it.

This is why for years I have lobbied for a 50% tax on any lawmaker’s, President’s, or Governor’s earnings (total earnings, not just what is made on his/her government job) if said persons vote for, sign into law, or allow any tax increase or the imposition of a new tax on anyone but themselves.

Problem solved.

TXUS on June 6, 2012 at 7:39 PM

“Stop the war on fake knees!”

Akzed on June 6, 2012 at 7:39 PM

You medical device manufacturers have pushed America to the forefront of medical technology and improved and extended the lives of millions.

And now you must be punished for it.

Socratease on June 6, 2012 at 7:39 PM

medical devices mean that people are receiving treatment, which costs money, and that is not in the interest of the new “Healthcare” Bureaucracy

phreshone on June 6, 2012 at 7:41 PM

Why do they even have this bill, if the whole thing might be thrown out anyway? Tells me Obamacare might be around a lot longer than people expect.

rickv404 on June 6, 2012 at 7:38 PM

All smart people have contingency plans. You can’t put all of your eggs in one basket.

MobileVideoEngineer on June 6, 2012 at 7:42 PM

One thing about this Obama guy, he is dependable. You can always count on him to do the wrong thing.

curved space on June 6, 2012 at 7:43 PM

They HAD to pass it so that we could see the garbage in it.

GarandFan on June 6, 2012 at 7:43 PM

Why do they even have this bill, if the whole thing might be thrown out anyway? Tells me Obamacare might be around a lot longer than people expect.

rickv404 on June 6, 2012 at 7:38 PM

It underscores the nefarious (word of the day) nature of ObamaCare, and makes for good political theater.

The way the bill about outlawing abortion by gender. It was defeated, but it certainly underscores the extent of the leprosy within the Dems.

INC on June 6, 2012 at 7:48 PM

After touring many device companies, both large and small, we know that this impending tax may force companies to cut jobs, reduce investment in R&D, move overseas, or even shut down completely.

Obama loves it when a plan comes together.

GrannyDee on June 6, 2012 at 7:49 PM

…it will destroy about 14,000 and perhaps up to 47,100 jobs.

Do you seriously think the boy king cares about jobs destroyed by his edicts?

Flora Duh on June 6, 2012 at 7:49 PM

I wonder how many Senate Democrats would vote to override the veto if Dingy Harry would bring the House bill up for a vote then let Ø veto? I guess we’ll never know with an obstructionist Democrat Senate.

ExpressoBold on June 6, 2012 at 7:50 PM

I see that the picture on the post has bho in his ‘pouty’ face. If bho doesn’t get his way, well dang bho will stomp, throw a fit, and give you the ‘face’? At least it isn’t the ‘middle finger on the face’!
L

letget on June 6, 2012 at 7:52 PM

White House threatens to veto repeal of medical device tax

I know this one “What is how not to make friends, and influence people”

What did I win ?

Dr Evil on June 6, 2012 at 7:55 PM

Bitter big government totalitarians cling to their taxes, regulations, and Mao’s little red book in times when the Tea Party is kicking ass.

jukin3 on June 6, 2012 at 7:59 PM

I wouldn’t be surprised to see more bills like this between now and November. The bills hit several birds with one stone. Not only are they bills that should be passed, they illustrate the harm of ObamaCare or other Dem policies, and if any Dems vote for these bills to save their own skin it will isolate Obama more and more from his party.

Obama let Pelosi and Reid do the heavy lifting the first two years. Rahm is no longer there. Obama has to have others do the work. One thing to remember is that Obama is pretty much completely inexperienced about getting major legislature through. He didn’t do it in the U.S. Senate. He didn’t do it in IL. In IL Emil Jones took legislation worked on by other Dems and handed it to Obama to be the name who finished it up to build his “record.”

Obama accomplished little during his first six years as a State Senator, as a backbench member of the minority party:

Republicans controlled the Illinois General Assembly for six years of Obama’s seven-year tenure. Each session, Obama backed legislation that went nowhere; bill after bill died in committee. During those six years, Obama, too, would have had difficulty naming any legislative ­achievements.

Jones became the State Senate President when the Democrats took the majority in 2003, and basically created most of Obama’s legislative record by adding Obama’s name on other people’s bills.

There’s no there there with the guy—about anything.

INC on June 6, 2012 at 7:59 PM

What? Things buried in Obamacare will make health care more expensive??
I’m shocked…SHOCKED, I tell you!

OccamsRazor on June 6, 2012 at 8:00 PM

I pray this piece of crap is dismantled otherwise I won’t be able to afford another new hip when I need it in a few years.

txag92 on June 6, 2012 at 7:35 PM

My girlfriend would likely be in the same boat a few decades down the road. Maybe not new knees but probably something that’s affected by this monstrosity of a bill.

MelonCollie on June 6, 2012 at 8:01 PM

Stupid is as stupid does.

kirkill on June 6, 2012 at 8:03 PM

Last time we had to try to drag McCain across the finish line.
This time we have to try to drag Americans.
I seriously never thought there was a chance he could win. I didn’t think we were that stupid. He won and it really spoiled my opinion of my fellow Americans. I’ll never trust them again in the same way.

vityas on June 6, 2012 at 8:03 PM

Recall Obama!

kirkill on June 6, 2012 at 8:03 PM

Well, now he’s just acting like a spoiled child….

TeresainFortWorth on June 6, 2012 at 8:08 PM

It’s almost as if BHO doesn’t want… hates …er uh .. wants to limi.. Heck. Some things are just beyond a rational person’s mind to understand.

kurtzz3 on June 6, 2012 at 8:12 PM

And did you peeps know that feminine hygiene products and toothbrushes are included as taxable in that convoluted mess? How the eff is a toothbrush a medical device? Scrap the whole law, start over.

sage0925 on June 6, 2012 at 8:18 PM

amerpundit on June 6, 2012 at 7:30 PM

If Dems/libs/progs have taught me anything, it’s that they will fight and die (metaphorically of course) on any hill, no matter its height or strategic value. They will kick, bite and scratch for as long as they can to keep their agenda moving forward, even down to 1/32 of a Cherokee, er inch, so that their ideological successor(s) won’t have to go as far when they pick up the banner and resume the march towards complete governmental control.

Left Coast Right Mind on June 6, 2012 at 8:24 PM

Libs: the way to solve the entitlement problem is to ensure that life expentancies are shorter and quality of life sucks for everyone. How to accomplish that, you ask? Well for starters kill healthcare innovation, then death panels can take care of the people…

txmomof6 on June 6, 2012 at 8:25 PM

If or if not bho veto’s this medical device bill, the 24/7 tv ads from lawyers ‘if this or that happened with this device, call us and you will get $’? This goes for any and all drugs from the lawyers as well? You think any company wants to invest in any new product with hanging over their heads if on single person ‘has issues’ with said product?

I have long ago dumped all medical and drug stocks because of the lawyers cratering the stock on one or two people with ‘issues’.

Agreed! Late night TV is swamped with “1-800-Bad-Drug” ads from Lawyers wanting to cut flesh from Device manufactures. These are men investing to extend and enhance the lives we have. What do Medical Lawyers do?

Bulletchaser on June 6, 2012 at 8:27 PM

And did you peeps know that feminine hygiene products and toothbrushes are included as taxable in that convoluted mess? How the eff is a toothbrush a medical device? Scrap the whole law, start over.

sage0925 on June 6, 2012 at 8:18 PM

So the Dems want birth control to be free because women supposedly can’t afford it, but women can afford to pay for feminine hygiene products plus extra taxes on them?

Lefty War on Women … and teeth …

toby11 on June 6, 2012 at 9:15 PM

Harry Reid’s office has indicated the Senate will not take up the legislation…

What else is new? The punch-drunk Reid might has well close up shop in the Senate until after the election.

slickwillie2001 on June 6, 2012 at 9:20 PM

The Boss Emeritus has also covered this extensively. For the life of me (no pun intended) I cannot understand Obama’s rationale to veto this (except for the old standby motive of “I won”). Whose vote is he going after here exactly? The anti-stent movement?

Buy Danish on June 6, 2012 at 9:22 PM

Why are you so sure Mitt would do anything different? Look at his record in Mass. Mass Care had all kinds of new fees in it. Fees similar to this one on businesses. Health Care has to be paid somehow and Mitt Romney still insist Mass Care is a great program. His new advisor wants these Health Panels nationwide. That is the major part of Obama Care. Mitt supported Obama Care in 2010 when it passed. He still supports it he is just saying things to get elected. Look at who advises him. They want no spending cuts ever (right in the future when has that ever happened?). They will thus have to raise taxes and this is a tax.

Steveangell on June 6, 2012 at 9:38 PM

A gutsy call.

a capella on June 6, 2012 at 9:45 PM

Steveangell on June 6, 2012 at 9:38 PM

Did MassCare tax medical device manufacturers? Yes or No.

Buy Danish on June 6, 2012 at 9:54 PM

His new advisor wants these Health Panels nationwide.
Steveangell on June 6, 2012 at 9:38 PM

Health panels? Do you mean health exchanges? And how do you define “nationwide”? States acting independently, or a “nationwide” federal mandate?

Buy Danish on June 6, 2012 at 9:58 PM

Health panels? Do you mean health exchanges? And how do you define “nationwide”? States acting independently, or a “nationwide” federal mandate?

Buy Danish on June 6, 2012 at 9:58 PM

Yes Health Exchanges. Mitt stands for making Health Care equal across the States. To me that means they must all equal what Mitt thinks is the best in this case Mass Care. Besides Mitt wrote in his book that Romney Care should be implemented Nation Wide. He fought for Obama Care in 2010 when it passed. Mitt is peeing on us and telling us it is raining when he says he would repeal Obama Care. Mitt loves it. Mitt invented it with his good friend Teddy Kennedy.

Steveangell on June 6, 2012 at 10:09 PM

Did MassCare tax medical device manufacturers? Yes or No.

Buy Danish on June 6, 2012 at 9:54 PM

Hey you can do your own research. It had fees on businesses the specifics I do not remember.

Steveangell on June 6, 2012 at 10:10 PM

You know the one thing I have thought the Republicans should not do with Obamacare??

Try to fix it.
They should not try to stop any of it, if they can’t repeal it completely.
Let people feel the brunt of this plan.
Create a law that doesn’t allow HHS to exempt companies and unions.

Let the plan live in all its glory til it can be repealed completely.

If they keep picking apart this turkey, it will never go away and we will have it forever.
And it will only get worse.

MityMaxx on June 6, 2012 at 10:19 PM

Hey you can do your own research. It had fees on businesses the specifics I do not remember.

Steveangell on June 6, 2012 at 10:10 PM

Fail.

Buy Danish on June 6, 2012 at 10:49 PM

Steveangell on June 6, 2012 at 10:09 PM

Yes Health Exchanges. Mitt stands for making Health Care equal across the States.

FALSE.

Everything else is in your comment is just blah blah blah BS.

Buy Danish on June 6, 2012 at 10:56 PM

After touring many device companies, both large and small, we know that this impending tax may force companies to cut jobs, reduce investment in R&D, move overseas, or even shut down completely.

Obama loves it when a plan comes together.

GrannyDee on June 6, 2012 at 7:49 PM

Sounds like ‘vampire taxation’ to me.

socalcon on June 6, 2012 at 11:03 PM

Fine, let the POS veto it and then send it back and over ride his veto. It is about time we put these spineless bastards on record for their votes for an increase in taxes in any form.

retiredeagle on June 6, 2012 at 11:35 PM

From the quote: “In an analysis that concludes that the tax will lead to a reduction in research and development by about $2 billion every year, Zycher estimates how many patients will suffer early deaths because of the throttling of innovation.

Which, though no one will admit it, is exactly the point of the tax. Limit patient access to innovative (and probably more expensive) devices, and if some of them die it means fewer people to drag money from Medicare along with the salutary side effect of reducing our greenhouse emissions.

NealK on June 6, 2012 at 11:40 PM

NealK 11:40

Exactly.

Typical socialist playbook. Infiltrate a legitimate government, screw it up, and stage a revolution to cover your butt for your screw up. When you take power, have poor ol’ Boxer sent to the knackers’, rather than own up to your responsibilities. Just like in Animal Farm, these people are swine.

avgjo on June 7, 2012 at 12:18 AM

2.3% doesn’t sound like much, but taxing revenue instead of profit is insane. Some medical devices have very high costs, and the profit is not all that great. But the tax sure will be!

In effect, the government isn’t just taking a sure of your profit. It’s demanding a piece of the action on all your expenses, too.

There Goes The Neighborhood on June 7, 2012 at 12:38 AM

taking a sureshare of your profit.

There Goes The Neighborhood on June 7, 2012 at 12:38 AM

Don’t ask me how I did that…..

There Goes The Neighborhood on June 7, 2012 at 12:44 AM

taking a sureshare of your profit.

There Goes The Neighborhood on June 7, 2012 at 12:38 AM

Don’t ask me how I did that…..

There Goes The Neighborhood on June 7, 2012 at 12:44 AM

If that doesn’t get it right, I give up.

There Goes The Neighborhood on June 7, 2012 at 12:45 AM

The device industry is getting a potential 30 million additional customers who eventually will gain medical insurance due to the health care overhaul, the White House said in its letter warning of the veto.

BS. As if anyone who really needs a medical device wouldn’t take the necessary steps to get one.

There Goes The Neighborhood on June 7, 2012 at 12:47 AM

How many companies that produce this equipment will lay people off because of this tax?

Or not hire those who are already out of work?

Anyway Reid will block everything the house passes. He’s being stupid in this regard and the people will reward him accordingly.

dogsoldier on June 7, 2012 at 6:20 AM

Our dear leader CHOOMER IN CHIEF….

Sherman1864 on June 7, 2012 at 7:30 AM

The tax on medical devices was, for me, the first and most significant clue (although not the only one)that the PPACA was a scam from the beginning.
You cannot “bend the cost curve down” for something if you are actually raising its cost.

And for those who argue that it’s a tax on the suppliers rather the customers (unlike a sales tax, which is paid on top of the purchase price that goes to the producer / retailer) and thus does not raise the cost of the products — yes, I have heard this argued by otherwise rational human beings — all costs are eventually passed on to the consumer, usually through higher prices calculated to generate the revenue to pay the taxes.

Please notice the spiral nature of this operation.

AesopFan on June 7, 2012 at 6:07 PM