The $1.6 trillion deal struck last night on Capitol Hill to fund the government includes a provision that would put a 2-year pause on Obamacare’s medical device tax.
The agreement, revealed by U.S. House leader Rep. Paul Ryan (R-Wis.) during a conference call last night with Republican leaders, delays the 2.3% revenue tax on U.S. sales of prescribed medical devices and also pushes the pause button on the so-called “Cadillac tax,” a 40% tax on high-benefit health insurance plans. The deal also would lift the ban on exports of U.S. crude oil that dates back to the 1970s.
Republicans reportedly told Democrats that they would only agree to the Cadillac tax moratorium, which put a big hit on labor unions, if the package included the medtech tax pause. Rep. Joe Courtney (D-Conn.) told The Hill that the fight against the medical device tax “got a second wind” from the tax negotiations.
“I think they’re riding in the wake of the Cadillac tax,” Courtney said. “When they saw that Cadillac tax was really moving, they kind of jumped on that.”
Another provision would ban a bailout of the Obamacare “risk corridors” designed to help insurance companies that participate in government-run health exchanges. At least 1 insurance giant, UnitedHealth Group, is threatening to withdraw from the exchanges, calling its participation “a bad decision.”
Republicans are dead set against reviving the risk corridor program, calling it a sop to the health insurance industry, and included a provision touted by presidential candidate Sen. Marco Rubio (R-Fla.) that would bar the Obama administration from transferring funds into the risk corridor program, according to The Hill.
“A 2-year suspension of the tax would allow medtech companies to address these issues and make the investments needed to accelerate patient and provider access to innovative health care products. MassMEDIC and its members urge our representatives in Congress to support the [medical device excise tax] delay when they vote this week,” said Tom Sommer, president of the Mass. Medical Device Industry Council. “While MassMEDIC continues to support full repeal of the [medical device excise tax], the suspension of the tax is an important and significant step forward in that effort.”
Scott Huennekens, chairman of the Medical Device Manufacturers Assn., said the medtech tax pause would boost innovation, job creation and patient care if enacted.
“MDMA applauds the bipartisan agreement to suspend the medical device tax as a part of the tax extenders package,” said Huennekens, who is also president & CEO of Verb Surgical. “Suspension of this onerous policy will empower med tech innovators to continue developing and delivering the cures and therapies of tomorrow, and will help protect America’s leadership position in this dynamic field.”
“We are extremely appreciative of the bipartisan efforts to include a two-year suspension of the medical device tax in the tax extenders legislation. Suspending the tax will be an important step in addressing the harmful effect it is having on research and development and continued medical progress. On behalf of America’s medical technology companies, our employees and the patients we serve, we urge Congress to act swiftly on this legislation,” added AdvaMed chairman Vincent Forlenza, chairman, president & CEO of Becton Dickinson & Co. (NYSE:BDX).
“MITA is encouraged by the inclusion of the two year suspension of the medical device tax in the tax extenders package, which comes at a crucial time for the medical technology industry,” Medical Imaging & Technology Alliance MITA chairman Nelson Mendes, president & CEO of Ziehm Imaging, said in prepared remarks. “The tax has been a drain on the economy and has halted investment in research and development for advanced imaging and other life-saving technologies. We appreciate the bipartisan efforts of Congress in taking this step to protect U.S. jobs and innovation, and we urge them to support the legislation.”
