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| Sen. Orrin Hatch (R-UT) |
With positive midterm election results in tow, Republicans in U.S. Congress are moving forward with plans to nix the medical device tax put in place two years ago under President Obama's healthcare law.
As Reuters reports, last week's elections catapulted Sen. Orrin Hatch (R-UT), a longtime opponent of the tax, to chairmanship of the tax-writing finance committee, setting the stage for increased pushback on the 2.3% excise tax designed to fund Obamacare. The tax, meant to bring in about $30 billion over 10 years, was unveiled in January 2013 and has since drawn bipartisan opposition from lawmakers.
In March 2013, Senate voted in a nonbinding measure for a symbolic resolution for repeal of the tax which included more than 30 Democrats and Republicans. The House of Representatives has also vocalized strong dissent for the tax, Reuters notes, voting on 50 occasions to repeal all or part of Obamacare.
"Repeal of the medical device tax has once again become a rallying cry for the Republicans … and now they have the congressional majority to potentially do something about it," analysts at BernsteinResearch said in a client note (as quoted by Reuters).
A device tax coup would come as welcome news to the med tech industry, as a repeal could boost profits by one to 5% a year, Bernstein analysts told Reuters. The 2.3% tax brought in $913 million in the first half of 2013, about 75% of what was expected, and although 15,000 filers were anticipated, only 5,107 medical device tax forms were collected last year.
Meanwhile, the industry is also weighing in on the issue, opposing proponents of the Affordable Care Act who claim that a 2.3% charge would pay for itself once healthcare reform picks up steam. Industry groups argue that new patients are more likely to be young and do not need med tech companies' bread and butter products such as hip replacements and pacemakers.
- read the Reuters article