Save Obamacare’s medical device tax!

U.S. Sen. Amy Klobuchar (D-Minn.) opposes the medical device tax -- is it a coincidence that a big manufacturer is in her state?
(Bennett Raglin / Getty Images for Elle)

The one piece of Obamacare that seems genuinely to be on the table in the shutdown standoff is the medical device tax, a 2.3% levy mostly on hospital devices designed to produce $30 billion in revenue over ten years.

You can mark down the bipartisan opposition to this tax as a triumph of Big Business lobbying. As we reported in May, the industry, which mostly comprises mega-manufacturers such as Johnson & Johnson, has attacked the tax with a raft of dubious claims and statistics.

But it’s enlisted members of Congress from states where it has a big presence in parroting its talking points. These include the claim that the tax will drive jobs overseas and destroy innovation.


Let’s put this bluntly: There is not a single objective study that validates the industry’s claims. Not one. The tax is applicable on any subject device sold in the U.S., wherever it’s made. And no manufacturer will abandon the U.S. market for the simple reason that we’re by a huge margin the largest medical device market in the world. And despite what soft-minded pundits have said, the tax isn’t levied on consumer devices like eyeglasses or wheelchairs. (Bob Schieffer committed this ignorant error on a recent CBS Face the Nation.)

The device industry likes to paint itself as uniquely burdened by this tax. That’s a lie. Because conservatives insisted that the Affordable Care Act be revenue-neutral, the law is packed with lots of taxes and fees affecting almost all stakeholders--doctors and hospitals will get lower reimbursements, “cadillac” health plans will get taxed, there’s a surcharge on capital gains for the wealthy, and even tanning salons will pay a fee.

That poses the question of how the device tax’s $30 billion would be replaced if it’s repealed. Obviously, the only choice is to hit all those other stakeholders even harder. Is the device industry OK with that? When we asked the spokesman for its lobbying arm about that, he replied, “We’re looking to Congress to replace the revenue and if so, how.The ball’s not really in our court.”

Very public-spirited of them, isn’t it? Can’t think of a more deserving bunch to get a tax break.

Paul Van De Water of the Center on Budget and Policy Priorities has more.

Reach me at @hiltzikm on Twitter, Facebook, Google+ or by email.


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