GOP, Dems join up to repeal Obamacare’s medical device tax, again
posted at 9:51 pm on February 7, 2013 by Mary Katharine Ham
My first post on HotAir.com was about the art of repealing Obamacare. The media scoffed at the many attempts House Republicans had made in this allegedly polarizing and fruitless endeavor, which was actually neither partisan nor futile:
The fact is this is only the second vote on total repeal, the first one coming in January of 2011 after Americans elected a wave of 63 new Republicans to, you know, repeal ObamaCare. Both votes for full repeal, in 2011 and 2012, were more bipartisan than the vote to pass ObamaCare, with three and five Democrats crossing over to the Republican side, respectively. And, I know we all love when we can work together, across the aisle, to get things undone. Beyond that, many of the votes on the Washington Post’s list feature far more Democratic defectors to the anti-ObamaCare side than the other way around.
The figure 33, of course, includes all sorts of bills that were only tangentially about ObamaCare repeal, or tweaked small parts of the bill, often with Democratic endorsement and votes. It includes several bills passed with hard-fought compromise later signed by Obama, like the debt-ceiling deal, and other bills that accomplished Obama’s legislative goals, such as the payroll tax cut extension bill.
Instead, the repeal process uncovered the many fiscal fictions that bolstered Obamacare’s passage, and led to repeal of at least two onerous and unworkable funding mechanisms—the CLASS Act and the 1099 reporting requirement.
Now, the medical device tax is up for reconsideration again by — wait for it— Republicans and Democrats, making for yet another repeal attempt that’s far more bipartisan than the original passing of Obamacare.
A bipartisan group of 180 House members — consisting of about 40 percent of the House — has reintroduced a bill to end the 2.3 percent tax on medical devices that was imposed under President Obama’s healthcare law.
That tax took effect at the start of 2013, and is expected to raise a few billion dollars a year in tax receipts for the government, and $30 billion over 10 years. But opponents of the tax say it will hinder innovation and job creation in the medical device industry.
“Placing a new tax on the backs of U.S. medical innovators and entrepreneurs who employ more than 400,000 Americans is not a prescription for economic growth or job creation,” said Rep. Erik Paulsen (R-Minn.), who sponsored the bill. “In fact, companies have already laid off thousands of employees as a result of this onerous new tax, and more jobs will be lost now that this tax is in effect.
The last attempted repeal of this tax earned a veto threat from President Obama over offsetting cuts added to the bill in committee. This bill does not yet include offsetting cuts, but may get them. The cuts Obama objected to so strenuously?
Ways & Means attached language that would pay for ending the tax by requiring the government to recapture all overpayments of health insurance subsidies provided in the healthcare law. Under current law, only some of these overpayments must be returned to the government.
Overpayments of the subsidies are anticipated because the subsidies are based on prior years’ income, and if it is discovered later that a family’s income increases, some repayment would be required.
Yes, why would we want to offset this onerous tax on small companies by not overpaying on subsidies, which one would think was already a basic tenet of responsible governance. Though the bill stalled in the Senate thanks to the veto threat, it had the support of even Democrats Amy Klobuchar and Elizabeth Warren. Again, more bipartisan than Obamacare.
I wrote about the medical device tax and its possible implications last year:
[M]edical device companies argue theirs is an industry with many small companies shouldering large research-and-development budgets and competing for elite medical and scientific minds.
As a result, it took Massachusetts-based Abiomed 30 years to show a profit building specialized heart pumps. During that time, the company has grown from 10 to 440 employees, but the company risks being back in the red if the excise tax goes into effect Jan 1, 2013, as planned.
Abiomed reported about $1.5 million in profit on the $126 million in sales the company realized during fiscal 2012. Had the medical device tax been in effect then, the company would have had to turn in every penny of its profits, plus another $1.4 million or so.
“None of this was allocated three years ago when we created a strategic plan to become profitable,” CEO Mike Minogue told the House Committee on Small Business last week.
Minogue testified the amount Abiomed will pay for the excise tax is the equivalent of 15 percent of the company’s research and development budget, 10 percent of its employee head count, or almost double what it spends on health care for hundreds of employees.
Let’s hope they can get some relief from this bipartisan coalition this time around, without the president’s veto threat. And, yes, of course this subtracts yet another $30 billion from the fiction that this thing didn’t add to the deficit, but most of us knew that was bunk before it passed. And it’s bunk with or without this tax.