Monday, September 30, 2013

Is The Medical Device Tax A Big Enough Deal To Shut The Government Down Over? 17 Conservative Democrats Think So


Saturday night House Republicans passed 248-174 a repeal of a medical device tax as part of the CR that threatens to shut down the government. They are demanding a one year delay to the Affordable Care Act and the repeal of the medical device tax. Few people who don't listen to Hate Talk Radio even know what the medical device tax is or why Republicans think it's worth shutting down the government-- or risking the jobs of more than 30 swing district Republicans-- over. Sarah Kliff explained what it's all about for Washington Post readers on Saturday before the vote. First... what it is... and then why it's become so contentious:
The Affordable Care Act is expected to expand health insurance coverage to millions of Americans, which amounts to a windfall for health-care providers. The previously-uninsured will, all of a sudden, have health plans that cover trips to the doctor and hospital. That's expected to increase the consumption of health care.

When legislators drafted the Affordable Care Act, they asked each health industry to essentially give something up in return for the increased volume of patients they would now see. Health insurers, for example, agreed to pay an industry-wide fee that would generate $60.1 billion in revenue over the course of a decade. Pharmaceutical companies had a higher assessment of $80 billion.

As for medical device makers, they ended up with a 2.3 percent tax on sales. This will, according to the Congressional Budget Office, generate $29 billion in revenue over the course of a decade--which the health law plows back into expanding insurance coverage. The tax applies to devices such as defibrillators or pacemakers. Anything sold over-the-counter directly to consumers (think hearing aids, contact lenses and eyeglasses) is exempt.

The medical device makers say the tax is killing jobs. This has been the key contention from companies that make medical devices, such as hip joint replacements or heart stents, ever since the health-care law passed. One study from industry group AdvaMed concluded that 43,000 jobs would be shipped overseas in response to the fee.

"The tax will stifle innovation and cost thousands of high-paying jobs," one coalition of 400 device manufacturers wrote in a 2011 letter to Congress. "It will increase the effective tax rate for many medical technology companies, thereby reducing financial resources that should be used for R&D, clinical trials and investments in manufacturing."

Device manufacturers contend that the tax will be especially hard on smaller companies that may have a more difficult time shouldering the burden. And, last but not least, they argue that the costs of the tax will be passed on to consumers in the form of higher health-care costs.

The White House doesn't buy it, and opposes repealing the medical device tax. The Obama administration has opposed previous congressional attempts to repeal the medical device tax. "This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion," the White House wrote in one repeal threat issued last summer.

Health law supporters have pushed back against the AdvaMed study and other arguments that jobs would go overseas. The left-leaning Center on Budget and Policy Priorities notes that the tax applies to medical devices manufactured both here and abroad, which would dampen incentives to move out of the country. The tax does not apply to medical devices that are exported outside the country.

...The medical device tax community has been pushing for repeal for years now. Pretty much since the law passed, medical device lobbyists have been pushing for repeal. In 2012, industry group AdvaMed launched a print and online ad campaign in support of medical device tax repeal. During the 2012 election campaign, the group sent Republican Congressional candidates a fact-sheet explaining why they should oppose the tax. All told the medical supplier industry has spent over $150 million lobbying Congress since 2008.
As ace investigative journalist Lee Fang ponted out this morning at The Nation, the letter from 75 teabagger congressmen to Boehner demanding a repeal was actually written by shady medical device lobbyist Ryan Strandlund and not by any of the dim-witted teabaggers claiming authorship.
While repeal proponents claim the tax will hurt innovation and devastate American devicemakers, the reality is, medical device companies already pay very little in taxes and Obamacare will make up for the tax with an increase in demand. An analysis by Citizens for Tax Justice finds most major medical device companies pay a very low effective tax rate, with firms like Abbot Laboratories making use of some 32 tax havens. Moreover, despite the claims of industry lobbyists, the tax will not hamper American companies because it applies to imported devices as well.
The 17 Democrats who voted to include the repeal in the CR are all extremely conservative and all sleazy characters without political scruples. All of them are frequent supporters of the right-wing Republican agenda and none have earned reelection as Democrats. Ironically, the list reads like Steve Israel's DCCC Frontline roster of candidates, incumbents who are in trouble back home. When you contribute to the DCCC, these are the incumbents who get virtually all the money-- allowing them to keep voting for Republican priorities and stabbing working families in the back:
Ron Barber (New Dem-AZ)
John Barrow (New Dem/Blue Dog-GA)
Cheri Bustos (D-IL)
John Delaney (New Dem-MD)
Tammy Duckworth (D-IL)
Bill Enyart (D-IL)
Dan Maffei (New Dem-NY)
Sean Patrick Maloney (New Dem-NY)
Jim Matheson (Blue Dog-UT)
Mike McIntyre (New Dem/Blue Dog-NC)
Jerry McNerney (D-CA)
Patrick Murphy (New Dem-FL)
Bill Owens (New Dem-NY)
Scott Peters (New Dem-CA)
Nick Rahall (D-WV)
Brad Schneider (New Dem-IL)
Kyrsten Sinema (New Dem-AZ)
This YES vote was recommended to these Members by the DCCC which is gambling-- once again-- that wooing conservatives is more important in elections than either doing the right thing or motivating the base to turn out. The DCCC was wrong in 2010-- ergo: the Great Blue Dog Apocalypse-- and they will be proven wrong again in 2014. Watch how many of these useless Members without backbone or conviction lose their seats next year.

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