Medical device tax in GOP crosshairs

Medical device tax in GOP crosshairs
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Repealing ObamaCare’s controversial medical device tax will be a top priority for the new GOP-controlled Congress, as Republicans and industry groups look to take their biggest legislative bite yet out of the president’s signature healthcare law.

The repeal, which was described by one GOP Senate staffer as the “low-hanging fruit” of the healthcare law, has been at the center of a yearslong, $200 million industry lobbying campaign that was largely brushed aside by the Senate’s previous, Democratic leadership.

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Lobbyists believe their long-awaited victory is within reach for the first time under the direction of incoming Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellGOP strategist donates to Alabama Democrat McConnell names Senate GOP tax conferees Brent Budowsky: A plea to Alabama voters MORE (R-Ky.), who has called the tax “the single worst piece of legislation passed in the last half century.”

Once a non-issue in ObamaCare debates on Capitol Hill, the repeal of the medical device tax now has near universal backing from Republicans and support from a growing number of Democrats.

Liberal-minded lawmakers, including Sens. Elizabeth WarrenElizabeth Ann WarrenOvernight Regulation: Net neutrality supporters predict tough court battle | Watchdog to investigate EPA chief's meeting with industry group | Ex-Volkswagen exec gets 7 years for emissions cheating Overnight Tech: Net neutrality supporters predict tough court fight | Warren backs bid to block AT&T, Time Warner merger | NC county refuses to pay ransom to hackers Avalanche of Democratic senators say Franken should resign MORE (D-Mass.) and Al FrankenAlan (Al) Stuart FrankenDemocrats turn on Al Franken Schumer called, met with Franken and told him to resign Overnight Finance: Trump says shutdown 'could happen' | Ryan, conservatives inch closer to spending deal | Senate approves motion to go to tax conference | Ryan promises 'entitlement reform' in 2018 MORE (D-Minn.) — both of whom represent device-heavy states — have expressed support for repeal. Both lawmakers’ offices, however, declined to comment on their positions ahead of a potential vote.

Even the White House appears open to signing off on the repeal, industry groups and GOP aides say.

“What we’ve seen out of the administration, they’re not wedded to the device tax as a policy,” said JC Scott, a longtime medical device lobbyist for the Advanced Medical Technology Association.

“It is clear that [Republicans] see an opportunity with this legislation,” he added.

Repealing the policy, which levies a 2.3 percent sales tax on medical supplies produced by about 7,000 companies nationwide, would mark one of the biggest successes for the GOP against ObamaCare after more than 50 votes to repeal the law.

But the repeal would also blow a major hole in ObamaCare’s bottom line — creating a budget gap of at least $29 billion through 2022. In its first year, the tax raised about $2.3 billion.

While the revenue from the tax is a fraction of the $151 billion expected from the individual mandate, proponents of the policy argue that it is a crucial way to offset the costs of expanding healthcare coverage to millions of people.

No lawmaker or industry group has yet proposed a replacement for the lost revenue, which the nonpartisan Congressional Research Services warned “may be difficult to find.”

And some in Congress have pushed back against the repeal effort. 

Outgoing Senate Majority Leader Harry ReidHarry ReidBill O'Reilly: Politics helped kill Kate Steinle, Zarate just pulled the trigger Tax reform is nightmare Déjà vu for Puerto Rico Ex-Obama and Reid staffers: McConnell would pretend to be busy to avoid meeting with Obama MORE (D-Nev.) defended the tax in a battle over tax cuts last year, calling it an important source of revenue for ObamaCare.

“I’m not going to cry any big tears over the device folks,” Reid told reporters in May, adding that the device tax industry is “doing extremely well with ObamaCare.”

The momentum in the Senate comes as the president’s healthcare law enters its fifth year and both sides appear to be warming to small reforms within ObamaCare.

“It’s taken a while for both parties to understand that you can correct some things that are wrong [with Obama-Care] but still adhere to your ideological positions,” said Evan Bayh, a former Democratic senator from Indiana and current adviser with the D.C.-based law firm McGuire Woods, which has worked to repeal the tax.

In the last several sessions of Congress, Bayh said, some Democrats refused to tweak any piece of the law because they feared it would “start an unraveling.”

On the right, he said Republicans were refusing to single out any one issue to avoid appearing in support of other pieces of the law.

“I just think a majority [of Republicans] will ultimately conclude that, after they’ve tried to get everything they want, that something’s better than nothing,” Bayh said.

One Senate GOP aide, who asked to remain anonymous to speak candidly about the party, said a small number of Republicans who remain adamantly opposed to ObamaCare are likely to oppose the repeal effort.

“[They] are thinking, ObamaCare needs to remain as painful as possible until we have all the players in place to actually repeal [the whole law],” the aide said, specifically pointing to conservative Sens. Ted CruzRafael (Ted) Edward CruzDebbie Wasserman Schultz marks 10 years as breast cancer survivor Foreign agent registration is no magical shield against Russian propaganda Let Trump be Trump and he'll sail through 2020 MORE (R-Texas) and Mike LeeMichael (Mike) Shumway LeeSupreme Court takes on same-sex wedding cake case House approves motion to go to tax conference — with drama Trump really will shrink government, starting with national monuments MORE (R-Utah). 

“Fixing it and making it more palatable is precisely what we don’t want, because we need that public support,” the aide added.