The medical device industry sees an opportunity as Congress prepares to tackle federal budget and spending issues before the end of the year and is therefore escalating its push for repeal of a controversial tax built into the Affordable Care Act.
The medical device industry this week released new studies showing medical devices are a minor player when it comes to rising healthcare costs and Medicare spending at hospitals.
“The device tax remains at the top of the political radar screen,” Stephen Ubl, president and chief executive officer of the Advanced Medical Technology Association, known as AdvaMed, said this week at the group’s annual meeting. “We need to finish the job and close the deal on device tax repeal. It’s a good opportunity right now.”
Now in its third year, the device tax amounts to 2.3% on medical device sales and was projected to raise nearly $30 billion over its 10-year life. AdvaMed said its polling of member companies indicates the tax has hurt spending on research and development by its companies and curtailed hiring even as several studies show the healthcare industry at large has ramped up hiring. AdvaMed includes some of the biggest names in the industry such as
Inside Obamacare: The Fix For America’s Ailing Health Care System explores the ways the Affordable Care Act will impact your health care.
As part of its renewed push, AdvaMed released a study by research firm Avalere Health that showed Medicare spending “for the most technology-intense hospitals matched the national rate for all other hospitals.”
A separate study by former top officials from the U.S. health and commerce departments showed prices for medical devices and diagnostics have increased at less than 1% from 1989 to 2013 compared to 4.5% for the “medical consumer price index.” Medical device prices also grew at a slower percentage rate than the overall 2.7% for the consumer price index during that time.
“Overall medical technology spending has remained consistently low,” Ubl said.
Device makers say they see a political opening in the next three months. Even when the Republican-led U.S. House has voted to repeal the Affordable Care Act and gained no support from Democrats to get rid of the entire law, Ubl said the votes are there by “veto proof” margins to eliminate the device tax in the U.S. House, where repeated attempts to kill the health law entirely have overwhelmingly failed.
Still, promises made by Senate Republican leader Mitch McConnell when the GOP took over the upper Congressional legislative chamber to repeal the device tax haven’t even come to a vote.
But there are a host of measures coming before the end of the year where Ubl, and Advamed board chair Vincent Forlenza, CEO of
Members of Congress averted a government shutdown last week and approved legislation that finances the government through December 11. Bills on tax reform, federal high funds and other measures could also be places to include the device tax.
“We don’t know how packages will come together by the end of the year,” Forlenza said. “We would have liked to have had the tax repealed by now (but) we are in a situation where it can move forward.”
