Device tax survives New Year's as industry vows to keep fighting
January feels about 2.3% colder for the medical device industry, as the excise tax on U.S. sales survived through its first-of-the-year date of birth and efforts to delay or rescind the charge didn't make it into Congress' fiscal cliff package. However, opponents of the tax say they'll keep carrying the flag of repeal.
Things were looking up for the antitax cause when, last month, 18 Democratic senators and senators-elect signed a letter to Majority Leader Harry Reid asking the upper chamber to consider delaying the tax's start date, giving companies more time to get their compliance departments up to speed with the new charge. Any clamor over the tax was swiftly drowned out by the ongoing wrangling over the fiscal cliff, however, and the deal struck late last night averts automatic budget cuts but leaves devicemakers out in the cold.
But Washington's December disinterest isn't enough to dampen industry groups' drive to get the tax off the books.
"The passage of a scaled-back fiscal cliff package that did not address the medical device tax does not diminish the need to repeal the tax," AdvaMed CEO Stephen Ubl said in a statement. "It also does not diminish the bipartisan support for the repeal effort, which is premised on the recognition that the tax is costing jobs and threatening patient care."
Gail Rodriguez, the Medical Imaging and Technology Alliance's (MITA's) executive director, said the fiscal cliff package dealt a blow to the imaging world by slashing physician office Medicare payments for advanced imaging services by $800 million over 10 years.
"When you add up all the Medicare cuts and Congress' reluctance to address the $30 billion medical device tax, this legislation produces a devastating impact that harms patient access to care, moves manufacturing jobs overseas and threatens America's leadership in medical research and development," Rodriguez said in a statement.
A repeal of the tax passed the House over the summer but has stalled in the Democrat-controlled Senate, thus making last month's show of support from Dem senators a heartening development for the industry. However, President Barack Obama is less than convinced, saying the Affordable Care Act will create about 30 million newly insured customers for the device industry, which, in the long term, will more than justify the upfront tax.
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