The Affordable Healthcare Act, also known as ObamaCare, includes a 2.3 percent tax on all revenues from the sale of durable medical devices that went into effect this year. The cost to medical device manufacturers has been almost $400 million dollars in less than three months.
Medical Device Manufacturers have been consistently advocating for a repeal of the device tax. Just today, at the Johnson and Johnson annual meeting of shareholders, chairman and CEO Alex Gorsky commented on a proposal from the National Center for Public Policy and Research to repeal the tax fully and replace some of the lost revenue by ending the subsidies for the wind industry. Mr. Gorsky affirmed that Johnson and Johnson is working with other trade organizations and thinks there are parts of ObamaCare that should be reconsidered.
Now there is news that suggests the tax may be repealed sooner rather than later.
Repeal is beginning to gain
bipartisan support in Congress
Last month, the United States Senate voted 79 to 20 to repeal the tax, with support from Democrats as well as Republicans. The downside of this vote was that it was for a non-binding resolution rather than an outright repeal. The House of Representatives voted for repeal in the last session before the medical device tax went into effect, but that effort failed in the Senate. Now that the tax is taking its toll on manufacturing jobs, the tide may have turned.
There is bipartisan support in both houses of Congress, but a winning repeal bill may be harder to craft. Removing the tax will reduce the expected revenue of $29 billion over the next ten years, and a successful repeal bill will need to be revenue neutral to survive a real vote in the Senate. One promising entry was proposed by upstate New York Congressman Dan Maffei, whose district includes Welch Allyn of Skaneateles Falls which has already announced the planned reduction of 275 jobs due to the tax. Another bill (HR 523) introduced by Erik Paulsen, a Minnesota Republican, and Ron Kind, a Wisconsin Democrat, already has 237 cosponsors.
The next step is ours
Senators and Representatives need to hear from their constituents in the medical device industry about the effect of the medical device tax on day to day and long range business decisions.
To find your Senator and write to Washington to be a part of the solution, click here. Then share your experiences and comments below.