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House Moves to Scrap Obamacare Medical Device Tax

By Melissa Attias, CQ Roll Call

June 18, 2015 -- Legislation that would scrap the health care law’s 2.3 percent excise tax on medical devices is on its way to the Senate after the House endorsed it in a recent bipartisan vote. Another bill to get rid of the law’s still-unappointed Medicare cost-cutting board is poised to follow next week.

The House passed the device tax repeal (HR 160) 280-140, with 46 Democrats joining a united Republican caucus in support of the measure.

Lawmakers are also planning to debate legislation soon that would repeal the so-called Independent Payment Advisory Board (HR 1190) and offset the cost with cuts to the health law’s prevention fund. A vote will take place the week of June 22.

Both components of the 2010 health law have long been targeted by GOP lawmakers, who moved repeal bills through the House in past Congresses, and are opposed by a number of Democrats. But the Obama administration threatened to veto the measures earlier this week, charging that the device tax bill “would increase the deficit to finance a permanent and costly tax break for industry without improving the health system or helping middle-class Americans.”

The tax, which took effect in 2013, applies to a wide range of medical devices with exemptions for items that are usually purchased by an individual at retail, such as eyeglasses and hearing aids. It was included in the law to offset some of the costs of the health coverage expansion. The medical device industry has made repeal a top priority.

Getting rid of the provision is estimated to cost about $24.4 billion from fiscal 2015 to 2025, according to the Joint Committee on Taxation staff. But the House-passed version incorporated an amendment from Ways and Means Chairman Paul D. Ryan, R-Wis., that would exempt the measure from the pay-as-you-go budget rules, allowing it to pass without an offset.

That move drew the ire of the nonprofit Committee for a Responsible Federal Budget and may have diluted some Democratic support for repeal, though other Democrats defend the tax by maintaining that the industry benefits from the law.

“Now they’re coming forth and saying, ‘just take us out of it,’” Sander M. Levin of Michigan, the top Democrat on the Ways and Means Committee, said in remarks for the House floor. “That’s unfair, unwise, irresponsible, and sets a pattern that will do what Republicans really want to do, which is to pick apart this reform which has been 75 years in the making.”

Opponents of the tax say it takes away jobs, hurts innovation and reduces access to life-saving technologies. In a letter to House leaders, the presidents of the American Association of Neurological Surgeons and Congress of Neurological Surgeons said they “enthusiastically support” passage of the repeal bill.

“Because our specialty is so highly dependent on advances in medical technology, repealing the medical device tax is among neurosurgery’s top legislative priorities,” they wrote.

The vote comes as the Supreme Court is poised to determine the fate of another piece of the 2010 health care law–its subsidies to help low- and middle-income Americans afford coverage. The justices are expected to rule by the end of the month on whether those subsidies can continue in the 34 states that use the federal insurance exchange.

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