Stopgap funding bill delays enforcement of medical device tax

Donald Trump and Mitch McConnell
President Donald Trump and Senator Mitch McConnell (C-SPAN)

The Senate has voted in favor of a stopgap funding bill, ending the government shutdown and further delaying the medical device tax. Medical device manufacturers are now due to start paying the tax in 2020 unless they succeed in getting it scrapped for good.

Republicans’ failure to overturn Obamacare or include measures to repeal the 2.3% medical device levy in broader tax legislation meant the previously delayed charge came into force at the start of the year, despite intense industry lobbying and opposition to the tariff among both political parties.

Now, with the day on which medical device companies would start making payments to the IRS looming into view, the Senate has voted to push back the implementation of the tax.

The Senate voted 81 to 18 in favor of legislation that resets the start date for the tax to 2020. The House followed suit, and shortly thereafter President Donald Trump signed the bill into law. The loss of the tax revenue is expected to cost the government more than $3 billion that was originally earmarked to fund health insurance subsidies related to the Affordable Care Act. 

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Trump’s signature gives the medical device industry some breathing room but doesn’t mark the end of the story. Trade groups and the medical device companies they represent want to get the tax tossed out forever. 

“While the two-year suspension is welcome, it is only an interim step toward the truly needed action by Congress to fully repeal this tax and unleash the promise of medtech innovation. We look forward to continuing to work with the Hill on a bipartisan basis to drive towards permanent relief,” Scott Whitaker, CEO of the Advanced Medical Technology Association, said in a statement.

Whitaker has allies on Capitol Hill. Earlier this month two Democrats from Massachusetts proposed legislation that would eliminate the tax on medical devices and offset the lost government revenues by revising the rules covering oil company accounting.