Business Roundtable

One of America's great competitive and innovative strengths is its medical device industry. That's why the House should vote today to repeal the new tax on devices, or rather, prevent it from going into effect in 2013.

The Patient Protection and Affordable Care Act imposed a 2.3 percent tax on medical devices, increasing costs to the industry and consumers and encouraging device manufacturers -- also concerned about the U.S. regulatory climate -- to relocate production to more hospitable countries. Business Roundtable has opposed the medical device tax from the beginning.

As Business Roundtable President John Engler said after the House Ways and Means Committee approved H.R. 436, the Protect Medical Innovation Act:

As the providers of health care coverage to more than 40 million Americans, Business Roundtable CEOs have consistently opposed taxes and fees on medical devices, insurance plans and pharmaceuticals that will simply be passed on to consumers and do nothing to improve the efficiency or quality of the health care system.

In a Statement of Administration Policy on Wednesday, the White House -- struggling to defend the health care law even as the Supreme Court prepares to strike some or all of the law down -- vowed to veto the legislation if it came to President Obama's desk. The message included another gratuitous, populist slap at business: "H.R. 436 would fund tax breaks for industry by raising taxes on middle-class and low-income families."

How is preventing a new excise tax from going into effect a tax break for industry? It's preserving the pro-competition, pro-jobs status quo; again, the medical device industry is an incredible economic asset for the United States.

The White House's argument is that if an industry could conceivably benefit from the Patient Protection and Affordable Care Act, it should pay for the privilege. MichBio, the trade association for Michigan's bio-sciences industry, refuted the assumptions in the White House claims. From the news release, "MichBio Challenges White House's Statement on Device Tax Repeal":

"We disagree with the President's premise that the device industry will benefit from the new health care law," said Stephen Rapundalo, Ph.D., president and CEO of MichBio, and chair of AdvaMed's State Medical Technology Alliance. "The medical device industry and others have asked for evidence to substantiate that claim but the White House has not done so. They make faulty assumptions based on erroneous data. Indeed, while initial estimates called for $20 billion in taxes, the latest White House budget estimates it will cost over $30 billion -- a 50% increase! In addition, they don't account for anticipated industry job losses, expenses associated with managing the tax tracking and accounting, and lower expected device sales, as others reduce their healthcare costs through reduced procurement."

AdvaMed, the national trade association for the device industry, has lots of good information on the economic impact of the tax at its website, www.advamed.org. We especially liked this 2010 report, "State Economic Impact of the Medical Technology Industry." Senators should take note, even if Majority Leader Harry Reid (D-NV) will prevent the bill from coming to the floor for a vote.

• Bloomberg, "Medical device tax repeal puts maker-state Dems in vise"
• National Review Online, "The Medical-Device Tax, Up for a Vote"
• AP, " GOP ignoring veto threat on medical tax repeal"

See also this letter from the Consumer Directed Health Coalition urging passage of H.R. 436.