Rep. Erik Paulsen called the tax a
“tax on innovation.”
Jerry Holt, Star Tribune
Taking aim at med device tax
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Article by: JIM SPENCER and KEVIN DIAZ (FiDA blog bold)
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Star Tribune staff writers
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May 30, 2012 - 9:11 PM
WASHINGTON - Republican House members are not
waiting for the long-sought decision of the U.S. Supreme Court next month on
the constitutionality of President Obama's signature health care law.
Spearheaded by Minnesota Republican Erik Paulsen,
the GOP-led House is expected to vote next week to repeal an estimated $28
billion tax on medical device makers. While the tax is intended to help pay for
the expansion of health care in the U.S., its repeal would provide relief to an
industry with a major hub in the Twin Cities, home of pacemaker giant
Medtronic.
Paulsen's bill, scheduled to pass out of the House
Ways and Means Committee on Thursday, represents the third time this year that
the House's GOP majority has moved to dismantle the health care law in whole or
in part, fulfilling a central promise of the 2010 Tea Party movement that
dubbed it "ObamaCare."
Paulsen's device tax repeal bill has 239
co-sponsors, including a dozen Democrats, which virtually ensures its passage
once it comes to the House floor, possibly as soon as early next week. At a
business roundtable in Minnetonka on Wednesday, Paulsen called the medical
devices tax a "tax on innovation" that would "hit companies in
Minnesota pretty hard" unless it were repealed.
Minnesota is home to some 400 medical device makers
who employ 35,000 people, making the state one of the leading regional
economies in the U.S. to feel the pinch once the planned 2.3 percent levy on
revenue kicks in next January.
Chances for a repeal are far less likely in the
Senate, where Democrats are reluctant to blow a $28 billion hole in a massive
health care overhaul that needs every dollar Washington can muster to expand
coverage to about 30 million people.
Potentially caught in the crossfire could be Sens.
Amy Klobuchar and Al Franken, Minnesota Democrats. Both have staked out
positions against the medical devices tax, but it is unclear whether they could
support a repeal effort that did not include a another means of filling the
funding gap.
"I still think we need to eliminate the
tax," Franken said, "but any plan to do so must be offset in a
responsible and fiscally sound way."
Klobuchar pushed to reduce the tax from the $40
billion that was originally proposed in the 2010 health care law. Appearing at
the Minnetonka roundtable with Paulsen, she said she would "continue to
support repealing it, reducing it, whatever we can do."
She has not said whether she would require the
offset that other Democrats want, waiting to see what might be proposed. The
GOP plan headed for the House floor next week provides no offset.
Industry presses
With no agreement on how to backfill the lost
revenue that would be generated by the tax, next week's action in the House
could turn out to be largely symbolic, much like previous votes to dismantle
the Affordable Care Act's cost-control board or to repeal the law altogether.
But political analysts say the election-year House
votes will count heavily on lawmakers' records, regardless what the Senate or
the Supreme Court do in the coming weeks. The medical technology industry also
has become heavily involved.
"We expect the House to pass the measure
[repealing the tax] with a significant number of Democrats voting to do
so," said Steve Ubl, CEO and president of AdvaMed, the country's leading
medical device advocacy group. AdvaMed has poured time and hundreds of
thousands of dollars into lobbying to get rid of the device tax, which it calls
a job killer.
In the 2012 election cycle, Paulsen received
$64,000 in campaign contributions from medical suppliers -- more than any other
member of the House, according to records compiled by the Center for Responsive
Politics.
Those records also show that Klobuchar, who is
running for reelection this year, ranks third in the Senate, with $63,650 in
campaign contributions from medical suppliers.
Paulsen quipped that "we're counting on
Senator Klobuchar to twist the arm of [Senate Majority Leader] Harry Reid to
schedule it on the Senate floor." But that appears unlikely.
"The Senate couldn't put [the House bill] on
the floor today and pass it," admitted Shaye Mandle, government relations
vice president for the LifeScience Alley, which represents the med-tech
industry in Minnesota. "There's a lot of politics, given the presidential
election."
'Congress' responsibility'
Even if the Supreme Court strikes down the
individual mandate, which forces individuals to buy health insurance or pay a
penalty, experts believe the entire Affordable Care Act will be difficult to
dismantle because many parts already have been put into place.
Using the individual mandate to increase the number
of healthy people buying insurance was the reform's most critical source of
revenue. If the Supreme Court throws that out, other revenue sources, such as
the device tax, magnify exponentially in importance.
Some in the medical device industry don't see that
as their problem.
"I don't think it's our responsibility to go
through the whole federal budget and find $20 billion," Mandle said.
"It's [Congress'] responsibility."
AdvaMed's Ubl believes there are other ways to
recoup the tax money that would be lost, should the device tax be repealed. But
his organization is not advocating for any offset and in fact hopes the Senate
will not attach one to the repeal bill.
The issue is complicated and controversial enough
that Ubl thinks it will not be taken up as stand-alone legislation, but perhaps
included in an end-of-the-year, overall tax package.
"We've heard from Senate Democrats who are
concerned if it gets pushed to a vote [right now]," Ubl explained.
Meanwhile, the IRS is moving ahead with rule-making
to collect the tax. The medical device industry is playing a role in that
process to protect its interests in the event that the House and Senate
deadlock over the device tax repeal.
"On the one hand, we want to get rid of the
tax," Ubl said. "But we have to prepare for its implementation."
Jim Spencer and Kevin Diaz are correspondents in
the Star Tribune Washington Bureau.
© 2011
Star Tribune
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