GOP Mulls Path on Device Tax Repeal After Trump Victory

BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...

By Michael D. Williamson

Nov. 10 — The precise legislative path for repealing the ACA’s medical device tax is “hard to know,” a key Republican lawmaker on the issue said Nov. 9.

Donald Trump’s victory in the Nov. 8 presidential election increases the likelihood the tax will be repealed in 2017. The 2.3 percent medical device tax, which has caused great consternation for the device industry since it was passed as part of the Affordable Care Act, was suspended for 2016 and 2017 and is set to go back into effect on Jan. 1, 2018.

Congress should act quickly, in a bipartisan way, on repealing the tax after Trump’s inauguration “to show we’re about results,” Rep. Erik Paulsen (R-Minn.) told Bloomberg BNA. He is a member of the Ways and Means Committee and in January 2015 introduced the Protect Medical Innovation Act (H.R. 160), which would repeal the device tax.

The House passed the legislation in June. However, the Senate nevervoted on a related bill, the Medical Device Access and Innovation Protection Act (S. 149), which Finance Committee Chairman Orin Hatch (R-Utah) introduced in January 2015.

Republican lawmakers could decide to repeal the tax through a new bill in 2017 or attach such language to other legislation, such as a measure replacing the ACA, to get rid of the tax, Paulsen said.

Other Paths

However, a single bill on the device tax repeal isn’t likely, health-care financial analyst Brian Rye told Bloomberg BNA Nov 9. Rye is senior government analyst for health care at Bloomberg Intelligence in Washington.

Congress could pass a bill repealing several key ACA provisions, including the individual and employer mandates, Medicaid expansion and all the taxes imposed by the law, Rye said. A similar bill (H.R. 3762) passed Congress in January. However, President Barack Obama vetoed it. A House attempt to override the veto in February failed.

Passing a bill similar to H.R. 3762 “becomes a more realistic opportunity” under a Trump presidency, especially if lawmakers can find ways to pay for revenue lost through repealing taxes found in the ACA, Rye said.

Comprehensive corporate tax reform also presents another opportunity for repealing the device levy, Rye said. The chances of such a long-discussed tax reform effort succeeding increase with Republicans controlling Congress and the presidency.

Industry Impact

Paulsen said the device tax’s suspension spurred hiring and product research and development efforts among medical technology companies. The fact that this is happening demonstrates that a full repeal would strengthen the device industry, he added.

It remains to be seen how a Trump presidency will affect the health-care industry as a whole, Rye said. The uninsured rate could increase if the ACA is drastically changed or repealed, which would prompt more bad debt at hospitals.

The financial pain felt by hospitals would then likely trickle down to the medical technology industry, Rye said. Fewer patients would be getting devices, and there would be less demand for surgical tools if the uninsured rate increases.

To contact the reporter on this story: Michael D. Williamson in Washington at mwilliamson@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

Full text of H.R. 160 is at http://src.bna.com/jZD.

Full text of S. 149 is at http://src.bna.com/j01.

Full text of H.R. 3762 is at http://src.bna.com/jZR.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.