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U.S. Senate may back symbolic repeal of medical device tax

Source: Thomson Reuters Foundation - Thu, 21 Mar 2013 22:56 GMT
Author: Reuters
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By Kim Dixon

WASHINGTON, March 21 (Reuters) - Opponents of a 2.3 percent tax on medical device companies will likely win passage this week in the U.S. Senate of a largely symbolic resolution calling for repeal of the tax, with some Democrats likely to join all Republicans.

The tax helps to fund President Barack Obama's 2010 healthcare law. It applies to a range of medical products - from bedpans to expensive heart devices - many manufactured in the home states of the senators backing the repeal.

The resolution calling for repeal will be symbolic because it will come in the form of a non-binding amendment to a non-binding budget measure drafted by Senate Democrats. The resolution would not actually repeal the tax.

Full repeal of the tax may be difficult to achieve, given its ${esc.dollar}30 billion price tag and the opposition of key Senate Democrats, including Majority Leader Harry Reid.

"The industry has a fighting chance of getting the tax moderated or eliminated as part of a much larger tax reform bill, where the device levy becomes a rounding error," said Paul Heldman, a policy analyst at Potomac Research Group. "But major tax reform in this Congress is a long shot."

Nine Senate Democrats are signed up to back the symbolic amendment. More than a dozen Senate Democrats wrote to Reid last year seeking to delay the tax.

Reid does not support repeal. Nor does Senate Finance Committee Chairman Max Baucus, who helped usher Obama's healthcare bill into law. The medical device tax is among several new industry levies in the healthcare overhaul law, which aims to provide health insurance for millions of Americans who lack it.

The law is being implemented. It was declared constitutional by the U.S. Supreme Court last year.

The medical device tax, which went into effect this year, is projected to raise about ${esc.dollar}30 billion over a decade. That government revenue would be lost if the tax were repealed.

Democratic Senators from Minnesota, Indiana and Pennsylvania, where some big medical technology companies are based, are among those who have been pushing for a repeal.

Industry officials and lawmakers against the tax say it will hurt innovation and job creation. (Reporting by Kim Dixon; Editing by Kevin Drawbaugh and Jan Paschal)

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