House Passes Bill to Repeal Impending Tax Hike on U.S. Manufacturers, Expand Health Care Coverage Options

Jun 7, 2012 Issues: Healthcare

Washington, D.C. – U.S. Representative Glenn ‘GT’ Thompson today voted to support H.R. 436, the Health Care Cost Reduction Act, legislation to repeal the medical device tax authorized under the President’s health care reform law, the Affordable Care Act (ACA) of 2010.  The measure passed the full U.S. House of Representatives by a vote of 270-146.

The ACA institutes a 2.3 percent excise tax on the manufacture or import of certain “medical devices,” which is scheduled to take place in 2013. The tax applies to U.S. sales, not profits, of medical device manufacturers, forcing companies, including many smaller start-ups that specialize in research and development, to pay it regardless of whether they’re profitable or not.  

“U.S. manufacturers lead the world in medical technologies that enhance the quality of care, improve the lives of patients and reduce the cost of health care,” stated Rep. Thompson. “The medical device tax included in the President’s Affordable Care Act will substantially harm the American consumer, our domestic medical device manufacturers, and workers in the industry. The impact will be felt hardest in states that have a large employment base in medical devices, such as Pennsylvania.”

The Joint Tax Committee estimates that the tax will cost device companies and the American consumer $20 billion between the years of 2013-2019, with the economic impact of the tax on wages and output significantly higher.  Industry based estimates show that implementation of the device tax could result in a loss of more than 1,900 jobs in Pennsylvania alone.

“Passage of H.R. 436 will stop an overly burdensome tax on these life-saving medical tools and technologies that, if implemented, would stifle innovation, undermine economic growth, and end up raising consumer health care costs,” Rep. Thompson added.  The Chief Medicare actuary predicts the excise tax will generally be passed through to consumers in the form of higher device prices and higher insurance premiums.

In addition to the repeal of the medical device tax, H.R. 436 would repeal limitations on the purchase of over-the-counter medications under the ACA, as well as make improvements to the use of health savings accounts (HSAs) and flexible spending accounts (FSAs).  Currently, more than 33 million Americans are enrolled in FSAs and over 13.5 million are enrolled in HSAs.

CBO has estimated that H.R. 436 will reduce the deficit by $6.7 billion over 10 years.