b. braun bethlehem
B. Braun Medical Inc. of Bethlehem is one of many manufacturers affected by the federal medical devices tax.
(Express-Times File Photo | MATT SMITH)
Repealing the federal medical devices tax -- a two-year-old measure enacted as part of the Affordable Care Act -- is no longer a partisan kickball in Washington.
Now that Republicans have majority control of the Senate as well as the House of Representatives, the issue is no longer reconciling differences between legislative leaders, or even with the White House. The Obama administration reportedly is softening its resistance to eliminating the tax, which takes a 2.3 percent bite of gross receipts of manufacturers of artificial joints, pacemakers, insulin pumps, diagnostic equipment, prosthetics, HIV tests, robotics, etc.
This tax should be repealed. Its damage to established companies and start-up companies, especially, is putting a damper on investment and innovation. Several businesses in the Lehigh Valley and northern New Jersey are affected by the tax, including B. Braun, Orasure Technologies, Olympus and Boas Surgical. This sector has been one of the brighter spots of the American economy, providing good-paying jobs, promising long-term growth and helping people live longer, healthier lives.
Even before the pending GOP takeover of the Senate, repeal bills had substantial support from Democrats, along with nearly universal backing from Republicans. In our area, Sens. Pat Toomey and Bob Casey, and Reps. Charlie Dent, Leonard Lance and Matt Cartwright, have been on board for repeal.
The one holdup? Replacing the estimated $30 billion the tax will generate over 10 years. In its first year, the tax brought in $2.3 billion from more than 7,000 companies. That pales in comparison to the $151 billion raised through the individual mandate of Obamacare, but it's a significant amount that shouldn't be lumped onto the federal deficit.
The rationale for the tax was that medical manufacturers, hospitals, insurance companies and other health-care players would benefit from the additional business created by the expansion in insurance coverage, so they should give something back to help with the overall cost. That's not unreasonable, but in the interim medical equipment manufacturers began looking at options to remain competitive -- cutting jobs, scaling back research and development, enacting hiring and wage freezes, shifting operations overseas.
Congress will have its hands full to counter the $30 billion loss, but that must be a priority in eliminating this tax. Also, using repeal as a tool to work toward eventual repeal of the Affordable Care Act isn't going to work. Regardless of one's opinion of the health care law, adding to the debt through a specialized tax break should offend conservatives and liberals alike.