A bipartisan spending bill unveiled today by Congressional leaders would permanently repeal the 2.3% medical device excise tax.
The spending bill, which must pass both houses of Congress and be signed by President Trump to take effect, would fulfill the widespread wishes of the medtech industry.
The tax went into effect in 2013 and has been suspended twice. One two-year pause ended in January 2018 and the second moratorium is due to expire at the end of this month. The tax on the sale of most medical technologies was enacted as part of the Affordable Care Act and applies to medtech companies’ revenues, not profits. In 2018, the U.S. House of Representatives passed a bill to repeal the tax 283-132, but the Senate failed to act.
Medtech trade group AdvaMed had lobbied against the tax for years.
“Without question, today is a great day for American patients,” AdvaMed president & CEO Scott Whitaker said in a news release about the permanent repeal’s place in the funding bill. “Inclusion of full repeal of the medical device excise tax in this funding agreement means America’s medtech industry can now focus exclusively on job No. 1: innovating and bringing the medical technologies of tomorrow to patients in need. This truly is an overwhelmingly bipartisan win for America’s patients.”
It’s also a huge win for the industry. The global medical devices market size was valued at $425.5 billion in 2018 and is expected to reach $612.7 billion by 2025, according to a report released last month by Fortune Business Insights. The medtech industry directly accounts for well over 300,000 jobs in the United States, according to the U.S. Department of Commerce. More than 80% of medical device companies in the United States consist of fewer than 50 employees.
The Tax Foundation recently estimated that if the tax were to go back into effect, it would lead to a loss of 21,390 full-time equivalent jobs and a reduction in of $1.7 billion in the gross domestic product. The tax does not lower healthcare costs for consumers but increases costs and burdens on the healthcare industry, the foundation said.
