Medical Devices and Prescription Drug Policy

House defies veto threat, votes to repeal medical device tax

The House passed legislation Thursday that would repeal the healthcare reform law’s tax on medical device manufacturers.

The measure won the support of 37 Democrats despite a veto threat from the Obama administration.

The bill was approved 270-146 after a debate in which Republicans said members of both parties support repeal of the 2.3 percent tax, which was created by the 2010 healthcare law. GOP lawmakers also said the bill’s proposal to pay for the lost $29 billion in government revenue has been supported by Democrats.

To pay for the repeal, the bill would require all overpayments of health insurance subsidies provided in the healthcare law to be recaptured. Under current law, only some of these overpayments must be returned to the government.

Overpayments of the subsidies are anticipated because they would be based on prior years’ income, and if it is discovered later that a family’s income increases, some repayment would be required.

{mosads}The Obama administration argues the bill would amount to a tax increase on working families. 

“This tax break… would be funded by increased repayments of the Affordable Care Act’s advance premium tax credits, which would raise taxes on middle-class and low-income families,” the administration said in the veto threat Wednesday.

But Republicans rejected the argument that recapturing subsidy overpayments is the same as raising taxes, and argued that Democrats themselves have proposed recapturing more of these overpayments as a way to raise money.

“Let me be clear — this is a bipartisan offset,” House Ways & Means Committee Chairman Dave Camp (R-Mich.) said. “Increasing the amount of overpayments to be repaid was a proposal first put forward by Congressional Democrats in the 2010 Medicare doc fix legislation which passed the Democrat-controlled House 409 to 2.

“Such an offset was used again when the House passed and the President signed 1099 repeal last year, and more than 70 Democrats supported that bill,” he added. “In fact, Health and Human Services Secretary Sebelius said paying back subsidy overpayments makes it ‘fairer’ for all taxpayers.”

The debate and vote comes ahead of the Supreme Court’s ruling later this month on the constitutionality of the health law’s requirement that all Americans must buy health insurance. Members of both parties seemed to have that pending decision in mind on Thursday. Democrats, for example, charged that the GOP was pressing the bill to continue their efforts to take down the law piece by piece.

After the vote, House Speaker John Boehner (R-Ohio) didn’t shy away from that charge, and said Republicans would continue to attack the law if the Supreme Court doesn’t strike it down.

“This is the 30th vote by the House aimed at repealing, defunding, or dismantling a portion of ObamaCare,” he said. “And unless the Supreme Court throws out the entire law, we will keep working to repeal whatever is left. Anything less than full repeal is unacceptable.”

House Majority Leader Eric Cantor (R-Va.) charged during the debate that Obama is only opposed to the repeal of the medical device tax because it’s part of his healthcare law, which Cantor called “unworkable.”

“We should not be increasing taxes to pay for a law that a majority of Americans want repealed,” Cantor said.

Cantor also criticized the veto threat because it ignored two other elements in the bill. At the last minute, Republicans added language that would allow over-the-counter drugs to be expensed under health savings accounts, and give people access to unused medical savings account balances.

“The President’s veto threat is notably silent on the other two major provisions of this bill,” Cantor said on the floor. “Are these provisions acceptable to the White House? Will health savings accounts even be permitted if the President’s healthcare law remains on the books?”

Cantor also said that while the tax takes effect in 2014, it is already threatening the nearly 500,000 jobs in the medical device industry. Still, he told supporters, “don’t expect this bill to reach the President’s desk in a timely fashion,” given Democratic opposition in the Senate.

— This story was updated at 5:23 p.m. to add Boehner’s reaction and correct Cantor’s quote to say Congress should “not be increasing taxes.”

Tags Boehner Eric Cantor John Boehner

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