Protect Medical Innovation Act - H.R. 184

The House Passed H.R.184 (283-132), which is a bipartisan measure that amends the Internal Revenue Code to completely repeal the 2.3 percent excise tax on the sale of a medical device by the manufacturer, producer, or importer. After its implementation was pushed back by two years, Congress voted in January 2018 to reschedule the tax once again, to 2020, as part of a spending deal to reopen the government. 

The tax was one of several measures that were implemented under Obamacare to help offset the provisions in the healthcare law, but members of the industry have long pushed for repeal, saying it will cost jobs and stymie innovation, particularly for smaller businesses. Medical devices include items such as pacemakers, wheelchairs, hip implants, or surgery tools. 

Summary              

H.R. 184 amends the Internal Revenue Code to repeal the excise tax on the sale of a medical device by a manufacturer, producer, or importer.

Background

Effective in 2013, the Affordable Care Act imposed a 2.3% excise tax on the manufacturer’s price of certain medical devices intended for consumption in the United States. Imports are taxed, but exports, certain products defined in statute, and products that are directly available for retail sale to consumers are exempt from the tax. The tax was in effect from 2013 through 2015, but the Consolidated Appropriations Act of 2016 temporarily suspended the tax for 2016 and 2017 and the Making Further Appropriations for the Fiscal Year ending September 30, 2018, extended the suspension for another two years (2018 and 2019).

Cost

The Joint Committee on Taxation estimates that H.R. 184 will reduce revenues by $22.45 billion over the FY 2019-2028 period.

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Bill Sponsor Rep. Erick Paulsen

“One of the best ways to protect American manufacturing, spur innovation, and make sure the latest and best medical technology is affordable for patients is to repeal this burdensome tax. We are already seeing new American jobs and increased investment in research and development as a result of the temporary suspension of this tax. With over 200 cosponsors at the start of this new session, and with overwhelming bipartisan support in the past, permanent repeal should be a top priority for Congress.”

“The medical device tax continues to stifle innovation, cost American jobs, and drive up health care costs despite bipartisan opposition in both houses of Congress. With over 250 cosponsors day one of the new session, it’s clear repealing this tax should be one of the priorities for the new Congress. The American people are looking for their elected officials in Washington to find common ground and repealing the medical device tax is a great place to start.”  

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House Democratic Whip Steny Hoyer:

This bill would repeal, without offset, the excise tax established by the ACA on medical devices manufactured in the U.S. or imported going forward. 

Because most sectors of the health industry were correctly expected to benefit from additional revenue when millions of previously uninsured Americans gained coverage under the ACA, the ACA included a series of provisions that asked those industries that are benefitting to contribute a portion of their additional revenue to help pay for the newly insured.  These provisions helped to ensure that the ACA reduces the deficit, as confirmed time and again by the Congressional Budget Office.  In the case of the medical devices, this contribution comes in the form of a 2.3% excise tax on revenues from all devices sold in the United States.

This permanent tax cut will add billions to the deficit, and Republicans have chosen to bring the bill to the Floor without providing an offset just a few months after House Republican’s $1.8 trillion deficit exploding tax cuts that benefit the wealthiest people in our nation. 

It is clear that this fiscally irresponsible bill is just another Republican attempt to undermine the ACA.  Skyrocketing health care costs are bleeding American families dry at the same time Republicans and Donald Trump continue their political attacks on the ACA.  House Republicans should work with Democrats to help improve the lives of the American people instead of forcing them to suffer the consequences of their irresponsible, politically driven actions.