Tag Archives: medical device excise tax

New Health Care Law

Congress Set To Deficit Fund Obamacare Almost $40 Billion

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iStock_000007047153XSmallI had always feared that Congress’ alternative to Obamacare was deficit funded Obamacare, and it looks like that is coming to pass. This is being done through the so-called “taxibus”, a legislative package that combines popular “tax extenders” (items like research and development tax credits that are legally temporary but practically permanent) with funding the federal government through September 2016.

The bill proposes a couple of years delay in three Obamacare taxes: The medical-device excise tax, he health insurance fee, and the excise tax on high-cost employer benefit plans. All three taxes are bad. However, the bill just delays them without cutting any Obamacare spending. Continue reading Congress Set To Deficit Fund Obamacare Almost $40 Billion →

Health Alerts

When Will We See Fiscally Responsible Health Reform from Congressional Republicans?

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(A version of this Health Alert was published by RealClearPolicy on July 16, 2015.)

Just a few weeks ago, Republicans in Congress announced a oint budget resolution, which (if ever enacted) would repeal Obamacare and balance the budget in ten years. That is all well and good. Unfortunately, when they pass health care legislation that actually has a chance of becoming law, they fail to pay for their promises. How can they be trusted to repeal and replace Obamacare with fiscally responsible, patient-centered health reform?

The Congressional Budget Office (CBO) estimates repealing Obamacare would increase the deficit by $353 billion over ten years, before considering the economic growth that would result from repeal. Because repeal would grow the economy, federal tax revenues would increase by $216 billion, resulting in a net deficit of $137 billion. So, when Republicans actually repeal Obamacare, they will still have to cut $137 billion of spending elsewhere.

Yet, they cannot even identify miniscule spending cuts to pay for current health-related bills. The latest is repeal of the medical device excise tax. This is a 2.3 percent excise tax on medical devices – from pacemakers to MRI scanners – to help pay for Obamacare. On June 18, the House of Representatives voted to repeal the tax. Every Republican present voted for it, plus about one fifth of the Democrat members. With those 46 Democrats joining the majority, the votes in favor added up to 280, just eight short of the number needed to override the promised presidential veto. It awaits a vote in the Senate. Continue reading When Will We See Fiscally Responsible Health Reform from Congressional Republicans? →

Health Alerts

Unbelievable! Senator Hatch Cannot Find $30 Billion For Medical Device Excise Tax Repeal

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(A version of this Health Alert was published by Forbes.)

Congress may be on the verge of repealing Obamacare’s medical device excise tax. I am all for repealing it, which will reduce funding for Obamacare by $24 billion over ten years. Of course, that means it will increase the deficit by $24 billion, which means Congress has to offset repeal by cutting spending by the same amount.

Can’t be done, says Senator Orrin Hatch, Chairman of the Senate Finance Committee: “It’s pretty hard to come up with a $30 billion offset,” (as reported by the Wall Street Journal’s Isaac Stanley-Becker). I am not sure how Senator Hatch rounded the figure up to $30 billion, but that does not really matter.

It should be as hard to find $24 billion or $30 billion of spending offsets as it is to find a cup of coffee at Starbucks. Here are some examples, plucked from the pages of President Obama’s budget proposals: Continue reading Unbelievable! Senator Hatch Cannot Find $30 Billion For Medical Device Excise Tax Repeal →

New Health Care Law

Obamacare’s Shrinking Revenues: Medical Device Excise Tax

The House of Representatives voted today to repeal Obamacare’s medical device excise tax, the 2.3 percent tax levied on medical devices sold in the U.S. The tax is certainly harmful. Whether it deserves the highest priority is another question.

The bill was scored by the Congressional Budget Office (CBO), which determined that it will increase the deficit by over $24 billion in the next 10 years. We seldom see explicit budget scores of individual Obamacare taxes. This score overlaps the original 2010 CBO score for four years, 2016 through 2019. Comparing the two scores (see Table 1) shows how much the taxes estimated revenues have shrunk – 36 percent, from $12.7 billion to $8.1 billion over the period. Continue reading Obamacare’s Shrinking Revenues: Medical Device Excise Tax →

New Health Care Law

Medical Device Excise Tax Kills Jobs, Obamacare Kills Much More

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The sweet smell of success for the medical-device industry is wafting over Capitol Hill. News from Senator Orrin Hatch is that the Senate will take up repeal of the medical-device excise tax. This is a tax of 2.3 percent on most medical devices that was passed as part of the Affordable Care Act to fund Obamacare.

AdvaMed, a trade association representing the medical-device industry has just published another survey of its members, which reports that

According to the survey, the tax has led to employment reductions of approximately 18,500 industry workers and will lead to forgone hiring of 20,500 additional employees over the next five years. The total impact of the tax on medical technology industry employment is approximately 39,000 jobs. Additional jobs will be lost in companies providing supplies or services to the industry. Forty-six percent of respondents said they would consider further employment reductions if the tax is not repealed. On the positive side, 71 percent of respondents said they would reinstate forgone hiring if the tax were repealed.

Continue reading Medical Device Excise Tax Kills Jobs, Obamacare Kills Much More →

Policy Updates

Say It Ain’t So! The Medical Device Excise Tax Doesn’t Hurt?

The medical-device excise tax, part of Obamacare, is a universally reviled 2.3 percent levy on medical devices. Many people think that it will finally be repealed, with Republicans in charge of both chambers.

Now, along comes the Congressional Research Service to pour cold water on the idea that the tax is a job killer. The writers agree that the tax makes no economic sense:

Viewed from the perspective of traditional economic and tax theory, however, the tax is challenging to justify. In general, tax policy is more efficient when differential excise taxes are not imposed. It is generally more efficient to raise revenue from a broad tax base. Therefore excise taxes are usually based on specific objectives such as discouraging undesirable activities (e.g., tobacco taxes) or funding closely related government spending (e.g., gasoline taxes to finance highway construction). These justifications do not apply, other than weakly, to the medical device case. The tax also imposes administrative and compliance costs that may be disproportionate to revenue.

Continue reading Say It Ain’t So! The Medical Device Excise Tax Doesn’t Hurt? →