The medical device and insurance industries are fighting to stop ObamaCare taxes from taking effect now that it’s clear the law will remain on the books next year.
Industry sources say they’re optimistic and that momentum is growing. They point to new legislation released last week to delay the health insurance tax and a letter — with a lengthy list of signees — sent to Speaker Paul RyanPaul RyanThe Hill Interview: Budget Chair Black sticks around for now Gun proposal picks up GOP support GOP lawmaker Tim Murphy to retire at end of term MORE (R-Wis.) in favor of repealing the medical device tax.
But there isn’t much time.
Congress previously delayed both the tax on health insurance and the tax on medical devices, but the pause is set to expire at the end of the year. The taxes, included in the Affordable Care Act, were meant to help pay for former President Obama’s signature health-care law.
“We’re fully activated now,” said JC Scott, the chief advocacy officer for the device trade association AdvaMed. “We’re engaging with members on both sides of the Capitol, both sides of the aisle regularly on [repealing the medical device tax]. We’ve shared our concerns with the administration.”
On Tuesday, 179 House members — including 43 Democrats — signed a letter to Ryan calling for the full repeal of the medical device tax. A spending bill passed in December 2015 put a two-year moratorium on the 2.3 percent tax on the sale of certain medical devices, such as pacemakers and MRI machines.
“The suspension of the medical device tax expires on January 1, 2018, and it is critical to the health and sustainability of this vital American manufacturing industry that this tax is not once again applied to its products,” the lawmakers wrote.
As for a legislative vehicle, the lawmakers simply asked Ryan to “ensure inclusion” in vehicles the House will vote on before the end of the year.
Scott believes repealing the medical device tax has enough support to move as a standalone bill, but that it also could be included in other measures. Legislation in the House to repeal the tax has netted 260
co-sponsors, while a Senate measure has 14 co-sponsors; both bills have bipartisan support.
The lawmakers and the medical device industry point to a federal report that shows jobs fell by nearly 29,000 during the time the medical device tax was in effect.
Though the report doesn’t specifically mention the medical device tax as the reason for the job losses, “we can’t say there’s a one-to-one correlation on all of that with the medical device tax, but to me, where there’s smoke there’s fire,” Scott said.
It’s possible a delay of the medical device tax or health insurance tax could be included in a year-end spending bill, along with other measures that might not be able to pass or might not get a vote before Congress recesses for the holidays.
Yet some say the taxes were included in the Affordable Care Act for a reason, and should stay.
“Obviously people would always prefer not to pay taxes,” said Paul Van de Water, a senior fellow at the left-leaning Center on Budget and Policy Priorities.
“We don’t levy taxes for the sake of levying taxes, but to pay for something which we think is worth having the government do, and in this case it was part of the price to pay for expanding health-care coverage to many millions more people,” he said.
The medical device and insurance industries, he said, have “greatly exaggerated the adverse effects of the taxes.”
But the industries insist that the taxes are harmful and should be repealed — and are looking to any possible legislative vehicle to reach that goal.
A delay of the health insurance tax was also included in the December 2015 spending bill, though it only paused the tax for 2017.
Critics of the insurance tax argue it leads to consumers paying higher premiums for their health care. An analysis from the consulting firm Oliver Wyman reports that the health insurance tax will lead to a 2.7 percent increase in premiums for 2018, which is a $165 annual increase per person in the individual market.
Last week, a trio of Senate Democrats introduced a bill to delay the tax for two years. There’s already a Republican bill in the Senate that would pause the tax for another year.
“Political reality is starting to set in for folks,” an insurance industry source said, “and I think they’re starting to look for ways to get this done to provide that relief for seniors, employers and individuals.”
There’s also another tax, known as the Cadillac tax, that some say should be included in any language that delays ObamaCare’s taxes. It’s an excise tax on pricey employer plans that has never gone into effect — and won’t until 2020.
James Gelfand is a senior vice president for health policy at ERIC, a national association advocating for large employers. He said a delay of the Cadillac tax is needed now because in 2018, insurance plans will be negotiating with vendors for 2020.
There’s bipartisan legislation in both chambers of Congress to repeal the Cadillac tax. Labor unions have been especially vocal in opposing the tax.