Legislation to Repeal Medical Device Tax Passes With Bipartisan Support in United States House of Representatives

June 18, 2015—Congressman Erik Paulsen (MN-03) announced that legislation that he authored to repeal the medical device tax has passed in the United States House of Representatives. The bill, H.R. 160, the Protect Medical Innovation Act, passed the House by a bipartisan vote of 280-140. H.R. 160 eliminates the 2.3% tax on medical devices that was included in the President’s health care law. The legislation now heads to the Senate, where repealing the medical device tax also has bipartisan support. A nonbinding vote to repeal the tax has previously received 79 votes, noted the congressman.

In a press release, Congressman Paulsen stated, “As a country, we take great pride in our ability to create, invent, and innovate—especially when it comes to products that improve people’s lives. The medical device tax stands in direct contrast to this ideal, which is why you’ve seen Members of Congress from across the political spectrum support its repeal. It’s time to push this legislation across the finish line and support American jobs and innovation.”

To highlight the effect the tax has had on a number of companies that manufacture medical devices, Congressman Paulsen noted that because the tax is on sales instead of profit, one small business in his district is paying an effective tax rate of 79%.

In January 2015, members of the Senate and House of Representatives announced new initiatives to pass legislation repealing the medical device tax.

Cook Medical stated in a press release, “[T]he company is pleased that the House of Representatives, working in a bipartisan effort, has acted to help patients needing the latest medical technologies, support hospitals struggling to control healthcare expenses, and boost United States-based device manufacturers in a global competitive market by passing HR 160 to repeal the medical device excise tax. While more needs to be done before this tax is repealed, Cook thanks the 280 legislators who voted in favor of this measure. We look forward to working with the Senate and White House to demonstrate that repealing this tax will have long-term benefits on jobs, communities, and ultimately on patients needing the best healthcare technologies possible.”

On June 15, President Barack Obama's White House Office of Management and Budget issued the following statement of administration policy regarding the legislation:

The Affordable Care Act has improved the American healthcare system, on which Americans can rely throughout life. After more than five years under this law, 16.4 million Americans have gained health coverage. Up to 129 million people who could have otherwise been denied or faced discrimination now have access to coverage. And, healthcare prices have risen at the slowest rate in nearly 50 years. As we work to make the system even better, we are open to ideas that improve the accessibility, affordability, and quality of healthcare, and help middle-class Americans. 
H.R. 160, which would provide a large tax break to profitable corporations by repealing the medical device excise tax, does not advance these goals. The medical device industry, like others, will benefit from millions of new consumers who are gaining health coverage under the Affordable Care Act. This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion. Its repeal would take away a funding source for financial assistance that is working to improve coverage and affordability and would increase the Federal deficit by $24.4 billion over 10 years. 
In sum, H.R. 160 would increase the deficit to finance a permanent and costly tax break for industry without improving the health system or helping middle-class Americans. If the President were presented with H.R. 160, his senior advisors would recommend that he veto the bill.