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Health Law Tax Foes Find Hope in Overhaul Effort

Tom Williams/CQ Roll Call File Photo
Camp is among the members of Congress working on a comprehensive tax overhaul.

Now, representatives of the medical-device industry are asking the Ways and Means panel to fully repeal the provision, which took effect this year, in a comprehensive tax overhaul package.

The Advanced Medical Technology Association called elimination of the tax “a prerequisite for making the code more competitive for our industry” in its submitted comments. And the Medical Device Manufacturers Association said the tax “directly and indiscriminately penalizes one of the world’s leading manufacturing industries.”

Camp already appears ready to include the repeal in the House tax proposal. In an email, Ways and Means spokeswoman Michelle N. Dimarob noted that “everything is on the table and the chairman has said he will absolutely repeal the Medical Device Tax in tax reform.”

But the Senate could be a different story; Baucus and Majority Leader Harry Reid, D-Nev., were among the Democrats voting against the device tax amendment to the budget resolution.

“The Finance Committee is meeting weekly, on a bipartisan basis, to go through numerous options for improving the tax code,” a Finance Democratic aide said in an email. “Nothing is off the table.”

Rep. Erik Paulsen, who has introduced legislation (HR 523) to eliminate the device tax, said he supports getting the provision fully repealed in the quickest way possible, whether it’s through his bill or as a part of a tax package. He called the push to include repeal in a tax overhaul “a strategic calculation,” noting that President Barack Obama and Reid both have shown opposition to doing away with the tax.

“I think tactically and strategically some are thinking ... it may have to be part of a broader tax package,” the Minnesota Republican, whose state is home to a number of device companies, said last week.

Insurance Fee

Another provision that has come under fire from a powerful lobby is the law’s annual fee on health insurance companies, often called the health insurance tax, which is slated to take effect next year.

The health insurance industry is pushing the Ways and Means panel to include its repeal in broader tax legislation, maintaining that the provision “will undermine efforts to control costs and provide affordable coverage options to the American people.”

“Enacting this repeal bill as part of a comprehensive tax reform package will be an important step toward restoring fairness to the tax code and protecting vulnerable populations from a costly and burdensome tax,” America’s Health Insurance Plans wrote in comments the group submitted to the committee.

Boustany is the sponsor of a House bill (HR 763) to get rid of the tax, which he says will be one of the drivers of higher premiums for small-business owners and families. But, as is true with the medical-device tax, repealing the fee would cost a substantial sum.

According to a Congressional Budget Office letter from July, removing the insurance provider fee is estimated to decrease revenue by $102 billion over 10 years. And repealing the medical-device tax is expected to cost $29 billion over the same period.

A broad package could offer more options for offsetting repeal of the health care tax provisions, which may make it a more attractive vehicle than a single bill. At the same time, it’s still a significant chunk of money that the package would have to make up for in other ways.

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