Never count out a determined, wealthy special interest from ultimately working its will in Congress, especially when that interest lathers politicians with campaign money.
And never bet on low-income folks in cases where they don’t spend a dime — mainly because they don’t have a dime to spend.
Such a saga is playing out right now in Washington, D.C., as Congress votes on a $1.1 trillion spending bill that includes a provision to suspend a 2.3 percent medical-device tax that the industry has feverishly tried to kill ever since it was included in the Affordable Care Act (ACA).
The tax raises up to $3 billion annually to fund help for low-income folks needing health care. These are the little people that U.S. Sen. Amy Klobuchar, D-Minn., likes to say she can be counted on to support against big moneyed interests.
Except when she doesn’t, like now.
The senator’s office is rejoicing over her role in the backroom deal to suspend the med-tech tax.
In 2010, Congress included a range of small taxes and fees in the ACA to subsidize folks needing health coverage they couldn’t afford.
In the early days of health reform, even the industry acknowledged that device makers would benefit from a new law because more people would use the health system supplied with devices. In fact, some publicly supported the ACA.
But that changed when the med-tech tax was added to the bill. Soon a multimillion-dollar campaign was underway to nix the tax.
U.S. Rep. Erik Paulsen, R-Minn., whose campaign fund benefits from Minnesota’s huge contingent of medical-device companies, was an eager crusader against a tax he calls “a jobs crusher.”
The industry peppered the media with claims that “30,000 jobs” would be lost or moved overseas due to the tax, exports would dry up, and research and development would suffer.
But every look at the industry’s “facts” proved them to be exaggerated or flat-out wrong. The nonpartisan Congressional Research Service said job-loss claims were “seriously flawed.” Bloomberg Government called them “not credible.” And the Washington Post’s fact-checker extensively reviewed the claims before issuing three Pinocchios — which is in the “baloney” range.
After the device tax went into effect in 2013, none of the job-loss claims could be verified by the U.S. Bureau of Labor Statistics. Plus, a prominent industry group, EvaluateMedTech, forecast that despite the tax the industry was poised to continue its impressive growth for at least the next decade.
And even Paulsen was surprised when told that instead of the tax being 2.3 percent on sales, its effective rate was 1.5 percent, because as an excise tax it’s deductible on corporate income taxes.
None of the dire claims by industry would stick. That didn’t matter to Paulsen, who’s at least consistent with his anti-tax, pro-business bent.
But it was troubling that both of Minnesota’s Democratic senators, Klobuchar and Sen. Al Franken, carried the banner of bogus industry claims as they joined Paulsen and even then-Rep. Michelle Bachman, R-Minn., in the drumbeat against the tax.
Apparently feeling the heat, Klobuchar once indicated she’d support tax repeal only if lost revenue would be made up by budget cuts elsewhere. She said she’d work on a so-called “pay for” with another powerful opponent, Sen. Orrin Hatch, R-Utah, but nothing came of it.
The anti-tax forces were out of credible ammunition and seemed to go into hiatus. Until earlier this week, when House leaders agreed to slip the tax-suspension into the massive spending bill. Given the late-year timing and the bill’s size, it’s unlikely to face an Obama veto.
As she crowed about the tax suspension, Klobuchar, through an aide, engaged in fanciful political spin by suggesting that Obama has softened on his opposition to eliminating the tax.
Klobuchar’s office was asked about the senator’s earlier vow to support repeal only if poor folks wouldn’t be hurt by billions in lost revenue.
After thinking about it for most of the day, Klobuchar’s aide said she no longer felt a commitment for a “pay for” because a later estimate shows that the ACA is costing less, so a two-year suspension of the tax would have a lesser effect on low-income people.
We should all feel better.
Ron Way, of Edina, is an investor representative on the boards of five medical start-ups.