Let's not hold our breath for a device tax repeal

A bill in the House aimed to repeal the medical device tax has 218 co-sponsors from both parties, giving it more than enough support to sail through. Meanwhile, the Democrat-controlled Senate voted 79-20 in favor of a repeal last month, with lawmakers from both parties decrying the tax as a needless job killer.

All that bipartisan agreement would suggest a short life for the tax on devicemakers' revenue, but that's not quite how Washington works.

For starters, that popular House bill asks simply to strike the 2.3% excise tax from the books, nowhere explaining how to make up the roughly $30 billion in government revenue it would reap over 10 years. That's been the divisive issue so far: House-passed repeal bills past were designed to gut other Affordable Care Act (ACA) programs to make up the device tax difference, part of the GOP's planned death by 1,000 cuts for healthcare reform. The Democrats in favor of nixing the tax, like New York's Dan Maffei, propose doing away with three tax incentives for the oil and gas industry, which are expected to cost about $30 billion through 2023. That proposal hasn't gained a lot of traction in the Republican-majority House.

And there's a big asterisk on that Senate vote: The measure was nonbinding and effectively symbolic, so despite winning the favor of 34 Democrats, it doesn't mean a repeal bill will ever actually come up for debate in the upper chamber. More likely, as Slate's David Wiegel put it, "it's a free 'anti-tax' vote for Democrats, and a way to inform an industry's lobbyists that their money's still good." It is perhaps no coincidence that the Senate's device tax vote came the Friday before a two-week recess, time lawmakers often spend filling campaign coffers in front of expensive plates and flatware.

Furthermore, all that Hill-side hand-wringing is likely pointless, even if it were successful. President Barack Obama would veto a device tax repeal were it to land on his desk, which we know because he said so. And no grassroots effort or political pressure is likely to get him to budge; second-term presidents often do as they please.

So what's the last remaining hope? Attaching a device tax repeal to the coming tax code reform effort, a bill unlikely to suffer presidential veto. Sen. Amy Klobuchar, a Democrat who has spoken out against the 2.3% levy, told Minnesota Public Radio that she's optimistic the newfangled antitax Senate cadre can get a repeal worked into a reform bill soon-to-retire Montana Sen. Max Baucus is working on.

Of course, there's just one problem with that plan: She's talking about the same Baucus who played a heavy role in authoring the ACA back in 2009, and thus the senator who ostensibly invented the medical device tax. Baucus, like Obama, has held steadfast in saying that medical device companies will more than make up the difference in revenue once healthcare reform makes for 30 million more insured patients--and thus 30 million more potential customers. Baucus counts the ACA among his crowning achievements as a 6-term senator, and it's just about unimaginable that he'd ever imperil healthcare reform in the interest of any single industry, job-creating or not.

But Baucus is on his way out, and it's undeniable that the device tax repeal effort has swayed far more Democrats since it began as a component of the GOP's war on ACA. You can certainly count on industry groups like AdvaMed and MITA to get the most out of their dollars and email blasts over the coming months, and, if medical device outfits start slashing payroll to cope with the charge, more and more lawmakers will likely feel the pressure to back repeal. They all have to run for reelection some time, and no one wants to be labeled a job-loser.

Which is to say: A repeal of the medical device tax is hardly impossible, just don't expect it any time soon. 

-- Damian Garde (email | Twitter)

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