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Another Voice: Medical device tax threatens Buffalo's economy

By Paul Alexander

At the first Democratic presidential debate, there was much discussion about a Congress that has become plagued by dysfunction. No better example of this is the way it has dealt with the Medical Device Excise Tax.

The tax was created by the Affordable Care Act, which established several new taxes to help pay for providing health care to 25 million uninsured Americans. Specifically, the ACA, signed by President Obama on March 23, 2010, imposed a 2.3 percent tax on an assortment of medical devices and products starting on Jan. 1, 2013.

Among the items to be taxed were pacemakers, artificial joints, dental instruments, surgical gloves and advanced imaging technology equipment used to conduct MRIs, ultrasounds, and CT scans. (Devices bought for individual use — hearing aids, wheelchairs, eyeglasses — were exempted.) States most affected by the tax would be California, Massachusetts, Minnesota and New York, where Buffalo is home to a number of medical device companies.

Almost immediately, critics of the tax questioned its logic. Was it really a good idea to slap a tax on items like medical gloves and ultrasound machines? Industry insiders complained the tax would produce higher costs for consumers, less money for development of new products, and job loss.

That’s exactly what happened, too. Between 2012 and 2015, the number of jobs in the medical device industry declined from 401,472 to 372,638, representing a 7.2 percent drop in employment in the field.

For this and other reasons, efforts to repeal the tax began in Congress. In March 2013, the Senate passed a repeal. The House passed repeals in September 2014, June 2015, and October 2018. But no piece of legislation repealing the tax was passed by the House and Senate and signed by the president. Although a temporary moratorium was placed on the tax, it will be reactivated on Jan. 1, 2020.

Just last month, a bipartisan group of 36 new House members wrote a letter to Speaker of the House Nancy Pelosi voicing concern about the continued failure to repeal the tax. But, lately, the problem has not been House leadership; it has been Senate Majority Leader Mitch McConnell, who refuses to bring up in the Senate a wide range of pieces of legislation, including yet another medical device tax repeal.

Rarely do the House and Senate agree on anything, but in the case of the medical device tax repeal they do. Attempt after attempt has been made to end a tax both Democrats and Republicans want to kill yet the tax remains on the books. Is it any wonder the American public has such a low opinion of Congress that its approval rating has not reached 30 percent in a decade now? Dysfunction, indeed.

Paul Alexander, the author of books about John McCain, John Kerry and Karl Rove, often writes about politics.

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