Health Care & Insurance  July 14, 2015

Editorial: Repeal medical-device tax, lost revenue or not

Congress stands closer than ever to repealing a key element of the Affordable Care Act, a 2.3 percent excise tax on medical devices that should never have been enacted in the first place.

The U.S. House of Representatives in June voted 280-140 to repeal the tax, which took effect Jan. 1, 2013, and the Senate is expected to act next. Repeal has bipartisan support, with even Mass. Sen. Elizabeth Warren, D-Mass., supporting repeal, though only if the lost revenue is offset, according to The Boston Globe. (Massachusetts, like Colorado, employs thousands of workers in the medical-device sector.)

Colorado ranks sixth in the nation for employment in the industry, according to the Colorado Bioscience Association, with hundreds of medical-device companies along the Front Range.

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President Obama has promised a veto if repeal is enacted, but supporters believe they have enough votes to override. During the House vote, Colorado’s four Republican representatives, include 4th District Rep. Ken Buck, voted in favor of repeal, while the state’s three Democrats, including 2nd District Rep. Jared Polis, opposed the measure.

We have called repeatedly for the ill-considered tax to be repealed. But we also understand the motives of some opponents of the tax, who seek to deliver a blow to the health-care law. Repeal of the tax will eliminate an estimated $26 billion to $30 billion in tax revenue over 10 years.

But with the ACA having survived another challenge at the Supreme Court, Congress should focus on fixing its foibles, not attempting to repeal or deliver crippling blows. An even stronger majority in Congress would support repeal if the lost revenue were replaced. That’s why we sympathize with Congressman Polis, who repeatedly has supported a version of repeal that would replace the lost revenue by closing tax loopholes that favor the oil-and-gas sector.

While the method of replacing revenue lost by a repeal of the medical-device tax can be debated, we support the idea in concept. In the end, however, a repeal of the tax should be enacted regardless of whether the revenue is replaced concurrently. Repeal will right a wrong and help an industry that should not be penalized for innovation. And, let’s face it: $30 billion over 10 years will not make or break the health-care law.

That amount is a drop in the bucket for the federal government, but it’s a burdensome amount for an industry that thrives on innovation — and one that’s of critical importance to the economies of the Boulder Valley and Northern Colorado.

A study by AdvaMed, a trade group for the medical-device industry, predicted that 30,000 jobs would be lost nationwide in the medical-device sector as a result of the tax, which is assessed on sales of medical devices, not just profits for medical-device companies. (AdvaMed supports health-care reform overall.) Some of those jobs could be shifted overseas to tax-friendly nations such as Ireland.

Those who favor repealing the tax only if the revenue is replaced should consider: Why do they support repeal in the first place? It’s because they understand that the tax is bad policy and damaging for a key industry. Perhaps 2015 will be the year this wrong is righted.

Congress stands closer than ever to repealing a key element of the Affordable Care Act, a 2.3 percent excise tax on medical devices that should never have been enacted in the first place.

The U.S. House of Representatives in June voted 280-140 to repeal the tax, which took effect Jan. 1, 2013, and the Senate is expected to act next. Repeal has bipartisan support, with even Mass. Sen. Elizabeth Warren, D-Mass., supporting repeal, though only if the lost revenue is offset, according to The Boston Globe. (Massachusetts, like Colorado, employs thousands of workers in the medical-device…

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