House Repeals Medical Device Tax That Pays For Health Care Reform

Allentown Morning Call

As part of the Republicans’ effort to handicap the Democrats’ health care reform law, the House voted Thursday afternoon to repeal a new 2.3 percent tax on medical device sales intended to offset the law’s cost.

With Pennsylvania a hub for medical device companies both big and small, GOP lawmakers like U.S. Rep. Charlie Dent and U.S. Sen. Pat Toomey have railed against the tax as a hindrance to business growth. In March 2011, the two held a joint event at B. Braun, a major medical device company, to condemn the tax. (Story here.)

The House voted mostly along party lines, and the White House threatened to veto the bill if it ever made it to the President’s desk, saying without the excise tax the cost would be passed on to middle and low income families.

A handful of Democrats supported the repeal, including Western Pennsylvania U.S. Rep. Jason Altmire, who said it would “help ensure that the next great medical device, the next great medical breakthrough is developed here not overseas.” Altmire voted against the 2010 health care law.

It’s a highly politicized debate. Even GOP presidential nominee Mitt Romney got involved, sending a press release after the vote saying, “With unemployment stuck over 8 percent for 40 months, we can’t afford policies that kill jobs and stifle innovation in one of America’s most dynamic industries. The ill-considered medical device tax is only one of many fatal flaws in Obamacare.”

Advocates for the tax contend that medical device businesses would benefit from millions of new government-insured customers and should help pay for the reforms. Democrat U.S. Rep. Allyson Schwartz said in a release that the House Republican repeal effort was “nothing more than a political stunt by Congressional Republicans to once again undermine the health care reform law.”

Dent, an original sponsor on legislation to repeal the tax, spoke on the House floor in the afternoon and referenced the local company Olympus, which manufactures custom orthotics, in his statement. He said the tax would threaten to put it out of business.

“And I quote, ‘the medical device tax would simply destroy what’s left of our company’,” Dent said. “‘After giving our all we would simply have to turn out the lights, lock the doors, and send 45 employees to the unemployment lines…’.”

Earlier this week, Bloomberg reported how the issue is tough for lawmakers who support the health care law but also have medical device companies in their district or state, citing Democrat U.S. Sen. Bob Casey as an example. From Bloomberg:

Senator Bob Casey, a Pennsylvania Democrat who is seeking a second term this year, said he has had “a lot of discussions” with manufacturers and others in Pennsylvania that raised concern about the tax. The state’s device industry includes Synthes Inc. (SYST) in West Chester, which manufactures and sells products used in orthopedic trauma surgery, and Dentsply International Inc. (XRAY) in York, which makes dental equipment.

Based on those discussions, Casey said he wanted to revisit and perhaps do away with the tax before it is implemented.

“We’ve been trying to do our best to come up with some middle ground, another approach that maybe hasn’t been examined yet, to get as much support as possible,” Casey said in an interview, adding that the Senate probably would vote on the issue before the November election.

Tom Smith, the Republican challenging Casey’s reelection bid, issued his own statement after the House vote, calling on Casey to join the group of House Democrats in siding with Republicans to repeal the tax. In supporting the health care law, Smith said that Casey “voted to enact a new tax that would force many employers to close their doors, send jobs overseas, and stifle lifesaving innovation.”

Senate Republicans, including Toomey, have called for a vote to repeal the tax, but have been unsuccessful in the Democratic-controlled upper chamber.

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