Medical device tax receipts now top $1 billion, industry says

  • Article by: JIM SPENCER , Star Tribune
  • Updated: July 16, 2013 - 10:26 AM

The tax on medical device makers’ gross receipts helps fund health care reform as Congress seeks elusive alternatives.

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Rep. Erik Paulsen, left, wants to repeal the portion of the health care act that taxes medical devices. File photo.

 

– The U.S. medical device industry says it has paid more than $1 billion to the federal government since a new tax on gross sales took effect at the beginning of the year.

Device makers battled furiously against the 2.3 percent tax, which is being collected to help pay for health care reform.

Supporters of the tax believe it will be offset once reform provides the device industry with new customers as health insurance is extended to tens of millions of uninsured Americans.

Trade groups for the device industry dispute that contention. On Monday, they fired another salvo in their campaign to kill the tax.

“The $1 billion threshold is frightening as every dollar spent paying for this medical device tax threatens medical innovation and American jobs,” said Gail Rodriguez, executive director of the Medical Imaging and Technology Alliance.

Rep. Erik Paulsen, R-Minn., has introduced a bill to repeal the tax into the House. The bill has attracted 253 co-sponsors, more than enough to pass the measure if it comes to a vote.

But killing the 2.3 percent excise tax would blow a $20 billion hole in the funding for health care reform. No easy alternative sources of revenue have been forthcoming.

Sens. Amy Klobuchar and Al Franken of Minnesota voted for and still support health care reform even though they want to end the device tax to help the state’s large medical technology sector.

Klobuchar and Franken, both Democrats, supported an amendment to the 2014 budget that calls for an end to the device tax. Now, they are pushing to find an alternative source of revenue in comprehensive tax reform soon to be discussed in the House and Senate.

Stephen Ubl, the Minnesotan who leads the Advanced Medical Technology Association, called device tax repeal “the first step to corporate tax reform.”

 

Jim Spencer • 202-383-6123

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