It’s déja vu all over again for medical device manufacturers that may have thought the election of Sen. Scott Brown in Massachusetts would kill the dreaded $20 billion medical device tax.
That’s because President Barack Obama’s legislative proposal for overhauling the healthcare system, released by the White House today, includes the very same 10-year, $20 billion tax on the medical device industry that was included in earlier healthcare reform bills.
The excise tax, which would be administered by the Internal Revenue Service, will not be implemented until 2013, according to the 11-page proposal. The rollout deadline marks a change from the Senate’s healthcare reform bill, which passed on Dec. 24, 2009. That bill had the approximately $2 billion-per-year tax on the industry beginning in 2011. (In December, an amendment sponsored by Evan Bayh (D-Ind.) and Amy Klobuchar (D-Minn.) to push the date back to 2013 wasn’t adopted in the final Senate bill.)
But there was hope at the time that the amendment’s provisions would be adopted in the compromise bill between the House and Senate versions. In addition to pushing the tax back to 2013, the amendment would have exempted companies with less than $100 million in annual sales and would have required those reporting between $100 million and $150 million pay an excise tax on 50 percent of their revenues; the rate for companies with more than $150 million in annual sales would have been 100 percent. If approved, the amendment would also have made the excise tax deductible.
Sens. John Kerry (D-Mass.), Al Franken (D-Minn.), Herb Kohl (D-Wis.), Debbie Stabenow (D-Mich.) and Kirsten Gillibrand (D-N.Y.) also signed on to that amendment.
Some industry officials had hoped that the election in January of Republican Scott Brown to the Senate seat left vacant by the death of Edward M. Kennedy scuttled the healthcare bill altogether, as Brown’s win eliminated the Democrats’ so-called “super majority.” The industry spent more than $20 million lobbying Congress during the fourth quarter of 2009, trying to make sure its voice was heard.
The White House is determined to make another push at taking back the reins in the healthcare debate. The new proposal marks the start of what promises to be an eventful week of debate in Washington over the fate of healthcare reform. Congressional leaders from both parties are set to participate with the president in what’s being billed as a “summit” on healthcare reform Feb. 25. The all-day event will be televised on C-Span.
The White House proposal is expected cost taxpayers some $950 billion over 10 years.
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