Republicans set sights on device tax with gridlock likely

Opponents of the 2.3% tax on medical device sales have some renewed hope: Senate Republicans are working to attach a repeal of the charge onto a package of tax breaks due for a vote, potentially nixing an Affordable Care Act provision that has irked the industry.

The tax, designed to bring in about $30 billion over 10 years, became a something of a rallying cry for Republicans looking to disable healthcare reform by cutting off its revenue streams, but the fervor over the issue largely died down after election season. Last year, 79 senators, including 34 Democrats, voted to repeal the tax in a non-binding measure, allowing members of both parties to issue anti-tax press releases but doing little for the industry.

Now, Senate Republicans see new opportunity in a bill designed to extend some expired tax breaks, planning to append a medical device tax repeal to the effort. However, in the Democrat-controlled Senate, the measure is likely to run into the same problems that plagued previous attempts: The majority party is unlikely to bring it up for a vote.

"I'm not going to cry any big tears over the device folks. Their profits were huge last year" Senate Majority Leader Harry Reid told Roll Call, citing Zimmer's ($ZMH) recent $13.4 billion deal to acquire Biomet. "... So, the device tax folks are doing extremely well. They're doing extremely well with Obamacare. Their profits have gone up significantly since Obamacare."

Meanwhile, the industry has maintained its opposition to the tax, which applies to all U.S. revenue--not profit.

Proponents of the Affordable Care Act argued that the 2.3% charge would more than pay for itself once healthcare reform got into full swing, as the ranks of newly insured patients would become customers of the devicemakers paying the tax. Industry groups take issue with that logic, however, arguing that the new patients are likely to be young and largely not in need of the hip replacements and pacemakers on which device companies make their money.

- read the Roll Call story

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