Should the Obamacare Tax on Medical Devices be Repealed? (H.R. 184)
Do you support or oppose this bill?
What is H.R. 184?
(Updated December 4, 2021)
This bill would repeal the 2.3 percent tax on medical device manufacturers and importers, that was imposed as a way to fund the Patient Protection and Affordable Care Act (ACA).
The medical device tax applies to things like pacemakers, or artificial joints used in operations like hip replacements. Given that a pacemaker usually costs around $23,000 the cost of the tax in that case would be about $529.
During the previous Congress, a two-year suspension of the tax was signed into law by President Obama after passing Congress with bipartisan support.
Argument in favor
Even though the medical device tax is supposed to apply to manufacturers and importers, the costs just get passed on to consumers. Passing those costs off on patients makes healthcare more expensive.
Argument opposed
The medical device tax barely has an effect on consumer prices. Plus, this bill offers no way to make up for the lost tax revenue that the government would miss out on if the tax is repealed.
Impact
People purchasing medical devices, medical device manufacturers and suppliers, the federal government.
Cost of H.R. 184
A CBO cost estimate is unavailable, but during the 114th Congress it estimated that a repeal would reduce tax revenue by $24.4 billion.
Additional Info
In-Depth: An analysis by the Congressional Research Service found that based on the way the medical device industry works, the ACA's medical device tax does not end up cutting into medical device company products, but is rather “passed on to consumers in price.”
However, the Center for Budget and Policy Priorities disagrees, pointing out that spending on taxable medical devices represents less than 1 percent of total personal health spending, so a small price increase would “have an almost imperceptible effect on health care costs and health insurance premiums.”
During the 114th Congress, this bill was passed by the House Ways and Means Committee by a vote of 25 to 14, and had support from 281 cosponsors — which included 40 Democrats. Speaking about his legislation after reintroducing it during the current session of Congress (this time with 277 bipartisan cosponsors so far -- 233 Republicans & 44 Democrats) sponsoring Rep. Erik Paulsen (R-MN) said:
“One of the best ways to protect American manufacturing, spur innovation, and make sure the latest and best medical technology is affordable for patients is to repeal this burdensome tax. We are already seeing new American jobs and increased investment in research and development as a result of the temporary suspension of this tax.”
Some Democrats in the House of Representatives have criticized this proposal for failing to replace the lost tax revenue that the federal government would miss out on if the medical device tax were to be repealed. Rep. Xavier Becerra (D-CA) said:
“Money doesn’t grow on trees. Just about every member would say, ‘Lets go forward and undo the tax,’ if, as some of the members on this side have said, we come up with a pay-for.”
Media:
- Sponsoring Rep. Erik Paulsen (R-MN) Press Release
- CBO Cost Estimate (Previous Version)
- KSTP
- Regulatory Affairs Professionals Society
- Center on Budget and Policy Priorities (Opposed - Previous Version)
- Tax Foundation (In Favor - Previous Version)
- Congressional Research Service (Context)
Summary by Eric Revell
(Photo Credit: Magnus1313 / Creative Commons)
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