Medical device tax: Shutdown-averting stopgap would delay tax, Senate bill would kill it outright

House Republicans last night presented their plan for funding the government ahead of an end-of-week shutdown deadline that would press the pause button again on the medical device tax, but it’s unclear whether the fractious GOP can unite in the face of Democrats’ opposition.

The 2.3% excise tax on U.S. medical device revenues was in effect for two years before a two-year moratorium went into effect for 2016 and 2017. It went back into effect at the beginning of this year.

In the Upper Chamber, the text of a bill to outright repeal the tax from Sens. Ed Markey (D-Mass.) and Elizabeth Warren (D-Mass.) released yesterday shows that it would offset the revenues lost by killing the tax by ending tax breaks for the energy industry.

The stop-gap House push to avert a shutdown would be the fourth such measure since September, extending the deadline another four weeks until Feb 16. In addition to pausing the medtech tax, it would pause other levies enacted as part of Obamacare, including the “Cadillac tax” for two years retroactive to Jan. 1 and the health insurance tax for one year starting in 2019. The measure would also grant a six-year extension to Medicaid’s Children’s Health Insurance Program.

Although the Republican rank and file reportedly supports it, conservative Freedom Caucus chairman Rep. Mark Meadows (R-N.C.) told Politico that many of his members oppose the plan, calling the tax delays a “gimmick.”

“Based on the number of ‘no’ and undecided votes, there is not enough votes for a Republican-only bill,” Meadows told the website.

Rep. Austin Scott (R-Ga.), speaking for the defense hawk faction, said continually kicking the can down the road on the funding bill undermines national security.

“In the end, the issue with national security is totally different than any of the other issues hanging out there,” Scott told the site. “We need to resolve this issue.”

“A two-year continuation of the medical device tax suspension is recognition that innovators should never have to make another payment as a result of this disastrous policy again. MDMA supports this continuing resolution and we remain committed to working with the overwhelming bipartisan coalition in Congress to obtain a full and permanent repeal of the medical device tax so that our nation’s proud med tech ecosystem can reach its full potential and develop the cures and therapies of tomorrow,” Mark Leahey, president & CEO of the Medical Device Manufacturers Assn., said in prepared remarks.

“AdvaMed applauds and supports passage of the pending continuing resolution that includes a two-year suspension of the medical device tax. First payments on the medical device tax are due to be made in just 12 days, and it is imperative that Congress act now before this devastating tax takes hold,” added AdvaMed president & CEO Scott Whitaker. “We strongly support this effort to provide immediate relief and believe that, in the long run, full repeal is the best way to provide the longer-term certainty this industry needs in order to make commitments to multi-year initiatives that support jobs and innovations for patients. We encourage Congress to move quickly on this important interim step.”

Senate bill would end energy loopholes

The text of the latest bill to repeal the tax, S.2287 or “A bill to repeal the medical device excise tax, and for other purposes,” is at least the ninth bill aimed at rolling back the tax. (In 2012, then-candidate Warren wrote an op-ed for MassDevice.com calling for the tax to be repealed and offset with other revenues, among other things.)

Like Markey’s first run at repealing the medical device tax in 2015, S.2287 would eliminate the medtech levy and replace the lost revenue by deleting tax loopholes for the energy industry.

Although U.S. Congress closed out 2017 without taking action to delay or repeal the medtech tax, despite broad support from both sides of the aisle, late last year Reps. Kevin Brady (R-Texas), Erik Paulsen (R-Minn.) and Jackie Walorski (R-Ind.) introduced a bill, H.R. 4617, that would suspend the tax for five years. Later the so-called “Problem Solvers Caucus” in the House filed a bill to amend Obamacare, H.R. 4695, containing a series of amendments to the Affordable Care Act including outright repeal of the medical device tax retroactive to Dec. 31, 2017.

There are at least six other bills in both the House and Senate that would affect the tax, according to Congress.gov, mainly aiming to amend Obamacare. The provisions in a pair of house bills, H.R. 184 and H.R. 1628, include repeal of the tax retroactive to Dec. 31, 2016, and Dec. 31, 2017, respectively; another House proposal, H.R. 1436, would repeal the tax but does not specify a date. And H.R. 286 would exempt emergency medical devices used by first responders.

In the Senate, S. 108 would enact an outright repeal retroactive to the end of last year. Another measure out of the Upper Chamber, S. 554, includes repealing the tax in a laundry list of ACA amendments.