House advances bill repealing healthcare law’s medical device tax

From The Hill, June 8, 2012

The House voted Thursday to advance legislation that would repeal the 2.3 percent medical device excise tax imposed by the Democratic healthcare law in 2010, which would raise an anticipated $29 billion over the next decade.

Members approved the rule for the legislation, H.R. 436, in a mostly partisan 241-173 vote, although eight Democrats joined Republicans in support of the rule.

The vote came after an hour of debate in which Republicans said the bill would help ensure medical device companies can continue to contribute to job growth and innovation. Rep. Tim Scott (R-S.C.) added that allowing the tax to hit medical device companies, which employ nearly a half million people, would not only hurt those companies, but would also hurt health outcomes for individuals.

“If medical device manufacturers are punished by this new tax, we are all punished,” he said on the House floor. “Our health is punished. Our parents’ health is punished. Our kids’ health is punished.

“If our medical device manufacturers cannot continue to adapt and move forward with new and better technologies, our medical care system will slow down right along side it,” he added.

Supporters of the excise tax argue that the medical device industry can bear the tax because the law will drive healthcare demand for those companies. The Obama administration made that argument in its Wednesday veto threat against the bill.

“This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion,” the administration said.

Rep. Jared Polis (D-Colo.) argued that while he and other Democrats support the repeal of the excise tax, there will be Democratic opposition to the bill because it combines two other healthcare-related bills, and pays for these changes in a way they oppose. Polis called the legislation an “incoherent mess of a bill.”

Aside from repealing the device tax, the bill would also allow over-the-counter drugs to be expensed under health savings accounts, and give people to access unused medical savings account balances. About a dozen Democrats were co-sponsors of the bill when it just included the medical device tax repeal, and despite Polis’s comments, some are likely to join Republicans in final passage later in the day.

The bill pays for the repeal of the device tax by requiring the government to recapture more over payments made to families for health insurance subsidies under the healthcare law. Democrats have argued before that increasing the recapture rate is akin to a tax on lower-income families, and Polis made that argument Thursday.

But Scott dismissed that argument. “Requiring people to return money not correctly given to them, this is not a tax,” Scott said. “And it certainly is not a tax increase. It is simply a matter of honor and integrity.”

After passing the rule, members moved immediately to debate on the medical tax repeal bill — 90 minutes of debate are scheduled, and a final vote is expected by the late afternoon. The rule also governs consideration of the Legislative Branch Appropriations bill for 2013, which the House is expected to take up in the coming weeks.