President Donald Trump promoted the idea of bipartisan opportunities in his 2019 State of the Union speech. One issue that may be an area of common ground is the idea of repealing the “medical device tax” that was part of President Barack Obama’s health care law. There are not many opportunities to get the Democratic controlled House and Republicans in the Senate and the White House on the same page, but this might be an issue that crosses party lines.
This is a real problem for many states. Look at New York State where the medical technical industry employs about 47,000 people both directly and indirectly, according to a website that documents the industry. Nationwide the numbers hit 519,000 people with direct impact and nearly two million when you include the indirect jobs. For New York State, there are 19,600 jobs that have a direct impact in producing medical devices, and the medical device tax hurts them. The impact on the New York economy is about $7.4 billion. When one looks at an issue that hits a state largely controlled by Democrats, like New York, the impact shows that there will be bipartisan will to solve the problem of targeted taxes that impact jobs.
When it was clear on election night that Democrats would take back the House, Nancy Pelosi took the podium and gave a speech calling for cooperation in a “bipartisan marketplace of ideas.” As this new Congress moves past the controversy over “the Wall” and how to fund the government, the real work will commence. The time is coming when Congress will look at a number of specific issues that both sides of the aisle already agree on, signaling 2019 could be the year both parties find something to agree about—in addition to issues like paid family leave, infrastructure spending and repeal of the medical device tax.
For almost eight years, elected leaders on both sides of the aisle have criticized the device tax for killing manufacturing jobs, stifling innovation and increasing the cost of health care for American consumers. Writing in Investor’s Business Daily earlier this month, former Rep. Ronnie Shows (D-Miss.) pointed out:
“As a matter of public policy, the medical device tax has been a dud. Originally a part of the Affordable Care Act, it applied a 2.3 percent excise tax to the sale of nearly any medical devices sold in the country—from sterile surgical gloves to MRI machines and CT scanners… But the tax’s authors apparently failed to see how the negative consequences of the tax would more than outweigh the benefits. Between 2013 and 2015, medical device sales declined by $188 million, and the industry reportedly lost more than 30,000 jobs as a result.”
Over the years, Congress has tried to repeal, reform or delay the medical device tax well over a dozen times. Although these efforts have been supported by doctors, patients and industry leaders, the unpopular and widely criticized tax still refuses to die. One reason is partisanship, because Democrats saw any attempt to chip away at Obamacare to be an attempt to repeal, while Republicans used the medical device tax as a talking point on why the whole law should be abolished. What was lost is that the medical device tax was no more than a “pay-for” to give Obama’s health care reform effort a lower score according the Congressional Budget Office (CBO). In other words, it served a purpose, like the tax on tanning salons, to make it look like the health care law had a lower cost to the taxpayer.
If Congress doesn’t act, the tax will go back into effect on January 1, 2020. Some might see this reality as just another testament to Congress’ dysfunction. However, a closer look at the strange-bedfellow coalition of repeal supporters shows that perhaps Congress can actually work together after all. It seems clear that efforts to “Repeal and Replace” Obamacare have failed, therefore Democrats don’t have to worry about a repeal of the medical device tax leading to a full repeal of the law.
Last July, the House voted to repeal the tax by a huge bipartisan majority—the effort by the Republican-controlled chamber gained the support of almost 60 Democrats. In the Senate, high profile members from the ideological edges of both parties have declared their support for repeal. Legislation introduced last year to do away with the tax had 15 Republican and 10 Democratic co-sponsors.
These developments tell us that the deep partisan and ideological differences which have stalled congressional action on many other issues don’t truly exist for the device tax. Particularly in the Senate, top leadership of both parties agree the tax is bad policy.
Congress has failed to act because other legislative priorities have taken precedence and Democrats are now promoting the idea of “Medicare-for-All” which would have the effect of repealing Obama’s signature health care law and replace it with a government funded system. And while this is just a part of the sausage-making political process that is the United States Congress, after eight years, it’s high time our legislators see beyond the political maneuvering and pass a full repeal of the device tax once and for all.
An early bipartisan victory in the new Congress would set a positive tone for new members—many of whom campaigned on an agenda to reach across the aisle and break legislative gridlock. Americans want to see legislators work together, and repealing the device tax in a bipartisan fashion would be an excellent way to oblige them. Failure to take any action on this issue will only compound the negative effects on one of America’s most important and successful industries. Furthermore, a failure to repeal will hurt the New York economy.
Brian Darling is the former senior communications director and counsel for Sen. Rand Paul (R-Ky).