One of Obamacare’s more hated taxes came roaring back in 2018 after Congress failed to delay the medical device tax in its year-end legislating, sparking a backlash from the industry which demanded lawmakers put it at the front of their 2018 to-do list.
The 2.3 percent excise tax on everything from surgical sutures to mobile X-ray machines was put on hold in 2016 and 2017, but that reprieve expired, and companies that manufacture the devices are now having to deal with it as they make their first payments in the new year to Uncle Sam.
AdvaMed, a trade group for the medical-device industry, launched ads in four states Friday urging Congress to provide relief. The 30-second spots argue that the tax will make it harder to produce pacemakers or devices that help people recover from injuries or cope with Parkinson’s disease.
“Congress has just raised taxes on life-changing medical devices. Now, treatments and cures could be out of reach for patients and families across the country,” says the advertisement from AdvaMed. “Congress, make things right. Repeal the medical device tax.”
The ads will first play in Texas, New York, Pennsylvania and California to apply pressure on Senate Majority Whip John Cornyn and Minority Leader Charles E. Schumer, the entire California delegation and both senators from the Keystone State.
The device tax was one of a host of levies President Obama and Democrats included in their 2010 health law to help pay for the program’s benefits.
But private businesses, insurers and labor unions have pleaded for relief since their inception, earning bipartisan support from lawmakers with big manufacturing bases.
Device makers must pay their tax throughout the year. Since they don’t have to make their first payments until Jan. 29, they’re hoping Congress will suspend or repeal the tax before then, likely as part of a budget deal that must be struck by Jan. 19 to keep the government open.
“If you don’t want this 2 million-employee-strong industry to pay that tax, then that’s the best time and the best option to do it,” said Greg Crist, a spokesman for AdvaMed.
Senate Finance Committee Chairman Orrin Hatch, Utah Republican, and House Ways and Means Committee Chairman Kevin Brady, Texas Republican, have said they would scrap or suspend the taxes, though they haven’t figured out how to recoup the billions in lost revenue.
“Chairman Hatch has long fought to repeal Obamacare’s egregious tax hikes and is working with his colleagues to find a viable path forward to achieve this goal,” said committee spokeswoman Katie Niederee.
The Ways and Means Committee in December floated bills that would delay the medical device tax for five years at a cost of about $10 billion.
A Brady spokeswoman said his panel is “committed to providing immediate relief from the medical device tax and other burdensome health care taxes — just as they provided relief from the most unpopular Obamacare provision, the individual mandate.”
Beyond medical device makers, health plans are lobbying to scrap the health insurance tax, or “HIT,” which also returned after a moratorium in 2016 and 2017. The tax is a fee that rises by a set amount each year and is divvied among insurers based on the share of premiums they collected the prior year.
Insurers baked the tax into premiums for 2018 but say failure to scrap it before 2019 will force them to add another surcharge to rates that are climbing due to the loss of “cost-sharing” reimbursements and the GOP’s decision to scrap the individual mandate.
For their part, Democrats said there are more pressing matters before Congress than taxes tied to Obamacare.
“Republicans decided not to end the medical device tax and the health insurance tax in their $2 trillion tax handout to corporations and the wealthiest,” said Henry Connelly, a spokesman for House Minority Leader Nancy Pelosi. “Democrats are focused on securing the urgently needed funding for the 9 million children who rely on CHIP, the vital community health centers across America, and the families struggling to overcome opioid addiction.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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