Congress Will Vote To Lift Obamacare Tax That Has Hampered Medical Device Industry

Congress Will Vote To Lift Obamacare Tax That Has Hampered Medical Device Industry

The medical device tax has become a burden for Minnesota’s medical device industry with a quarter of the taxes paid for by companies within the state.

Congress announced on Wednesday that it would vote next week on the suspension of a medical device tax in a federal budget deal that, if repealed, could boost the bottom line for Minnesota’s robust medical device industry.
 
The medical device tax was implemented in 2013 as a means to fund President Obama’s health care law. It excises a 2.3 percent tax on the sale of products like pacemakers, ultrasound machines, artificial hips, ventilators and X-ray machines. With Minnesota being home to the most geographically concentrated per capita medical device footprint in the world, roughly 25 percent of the tax burden was being paid here, according to a report by St. Louis Park-based LifeScience Alley, the nation’s largest life sciences trade association.
 
Erik Paulsen, Minnesota’s third congressional district representative, believes that passing this provision would clear “an unnecessary burden” for the state’s healthcare innovators. “It’s driven [research and development] overseas, harmed job creation here at home, and made it difficult for small businesses to grow,” he said in a statement.
 
In the first year of the tax’s implementation, as many as 33,000 of the country’s 400,000 medical device industry workforce was either eliminated or moved out of the U.S., according to a 2013 study by the Advanced Medical Technology Association. Minnesota alone is home to more than 700 medical device companies that employ approximately 35,000 people.
 
The year-end “tax extenders” agreement would suspend the excise tax through December 31, 2017, however Paulsen and U.S. Senator Amy Klobuchar hope to ultimately repeal the tax altogether.
 
“I opposed the medical device tax from the start,” said Klobuchar in a release. During the healthcare reform debate years ago, Klobuchar aimed to cut the tax in half, which would have resulted in a $20 billion reduction in the tax. By folding the tax completely, Klobuchar expects it would “improve patients’ lives, create well-paying jobs and give Minnesota businesses the certainty and stability” they need.
 
LifeScience Alley and its CEO Shaye Mandle have long promoted the elimination of taxing medical device sales. “With a suspension of the medical device tax, Minnesota companies can re-invest in research & development directly in the state and ensure that we continue to produce high-paying knowledge-based jobs, while improving therapies and further lowering the costs of healthcare.”
 
Repealing the medical device tax has been a longstanding debate in Washington D.C. and one that played a major role in the 2013 federal government shutdown. During that time, the House voted to repeal the tax and the Senate opted to delay it, all of which was vetoed by President Obama.