FLASH: House repeals medical device tax 270-146

The U.S. House of Representatives passed the medical device tax in a contentious 270-146 vote today, over the strong objections of Democrats who took offense to the GOP’s pay-for.

The measure had 240 co-sponsors ahead of the highly-anticipated vote, essentially guaranteeing successful passage through the House, but only about a dozen Democrats had offered their support. Several blue members lamented during pre-vote proceedings that they would have voted for repeal had the GOP come up with a more favorable offset to ensure that the repeal didn’t create a deficit in funding for healthcare reform.

Nearly all House members were present for the vote, and not a single Republican voted against the measure.

The vote took place in the shadow of a Capitol Hill bulletin assuring that White House senior advisors would block the bill, H.R. 436, should the measure reach the President’s desk – a gesture that may have galvanized Democratic opposition to the bill’s offset, which would take a stronger hand in recouping over-paid tax subsidies from low- and middle-income households.

"This approach before us today isn’t a serious approach to reducing the deficit," Rep. Jared Polis (D-Colo.) said on the House floor today. "It’s an approach the President would veto. It puts the burden squarely on the shoulders of working families in this country."

"It doesn’t help get Americans back to work," Polis added. "This is based on politics, plain and simple, not on sound economic policies that are good for the middle class, good for the medical device industry and good for America."

Prior to today’s vote, many Democrats had reserved judgement on Rep. Erik Paulsen’s (R-Minn.) repeal bill, which is more than a year in the making, while waiting for Republicans to come up with a pay-for to make up for the $30 billion in revenue the 2.3% medical device excise tax would generate over 10 years.

The House Ways & Means Committee meeting last week saw most Democrats unwilling to move on the tax repeal bill until the pay-for was established, although 2 Dems did join the 23-11 majority in passing the measure to the House floor.

Read MassDevice.com’s interview with med-tech tax repeal author Erik Paulsen (R-Minn.)

GOP leaders unveiled late last week to pay for medical device tax repeal through a measure that would strengthen efforts to recoup healthcare insurance subsidies paid to low- and mid-income households should their eligibility change.

The measure could raise as much as $43.9 billion over 10 years, but that didn’t garner much favor with Democrats.

"Pay for this bill – there are plenty of ways that we can," Polis said. "Unfortunately this closed rule allows for no discussion other than the extremely partisan middle class tax increase, which the Republicans have proposed to pay for this bill."

"If we can find a way to pay for it that doesn’t throw over a quarter million Americans out of healthcare insurance, that doesn’t increase taxes for a family making $72,000 a year – and we can – let’s do it," he added.

Read more of MassDevice.com’s coverage of the medical device tax.

The plan would require full reimbursement of any excess tax credits patients receive under health care reform’s government-sponsored health insurance exchanges, doing away with a cap on liability for overpayments and a 2-year statute of limitations. Democrats warned that it would unfairly penalize families who improved their status, through new jobs or promotions, after having received the subsidy.

"We have heard consistently, over and over again … is that that somehow recapturing overpayments of healthcare subsidies is now considered a tax," Rep. Tim Scott (R-S.C.) responded. "At a time when we face a $16 trillion debt, we cannot afford to not recapture all the money owed to the federal government. My friends on the left want you to believe if you recapture dollars that were given inappropriately, that’s tax increase."

"This is not a tax," he added. "It’s certainly not a tax increase. It’s a matter of honesty and integrity."

Following a brief intermission and surprise tribute to House Minority Leader Nancy Pelosi (D-Cali.), the first woman to serve as the Speaker of the House, the chamber voted 242-173 to pass the bill to a vote without amendment, and the chamber launched into 90 minutes of debate ahead of the vote.

"Let’s talk about basic economics," Rep. Tim Scott (R-S.C.) said. "If you tax something you get less of it, that’s simple economics. Apparently, somehow there is a desire to get less medical innovation."

"If medical device manufacturers are punished with this new tax, we are all punished," Scott added. "Our health is punished, our parents’ health are punished, our kids’ health are punished."

The victory in the House today is a step toward striking down the med-tech tax, but the battle could get tougher as the debate continues in the Dem-led Senate.

With the White House’s threat to block the bill’s progress and a bleak outlook from financial analysis firm Morgan Stanley, it may be difficult to win Democratic support.