Minnesota Congressman looks to Web for medical device tax repeal

2:21 pm by | 1 Comments

Congressman Erik Paulsen, co-chair of Medical Device Caucus

U.S. Rep. Erik Paulsen, one of the top boosters for the medical device industry in Congress, doesn’t see a major repeal of health reform taking place. Still, the Minnesota Republican is hopeful some aspects of the law will change, including an upcoming tax on medical devices that Paulsen believes will stifle innovation.

The nearly 50-member House Medical Technology Caucus that Paulsen co-chairs launched a website on Monday to help industry executives better connect with Congress about the tax and other issues.

Speaking at a Monday event sponsored by the life sciences trade group LifeScience Alley, Paulsen said the tax — a 2.3 percent excise tax on most medical devices that goes into effect in 2013 — will reduce medical technology jobs in Minnesota and across the country.


The government shouldn’t burden a medical technology industry that is one of the “bright spots on the economy,” Paulsen said.

The congressman has been trying to repeal the device tax ever since the Affordable Care Act passed a year ago. His opinions carry more weight now that Republicans are in the majority in the House. Paulsen himself recently gained a seat on the powerful House Ways & Means Committee.

Paulsen presently has about 100 cosponsors for his Protect Medical Innovation Act to overturn the device tax. Sen. Orrin Hatch, R-Utah, is sponsoring a companion bill in the Senate. Paulsen is hopeful he can gather bipartisan support to pass the measure in much the same way that Republicans and Democrats recently came together to overturn a section of health reform that increased tax filing requirements for businesses.

Paulsen acknowledges there’s a hurdle: The device tax is supposed to yield $20 billion in revenue over 10 years. “How do you make up for $20 billion?” Paulsen said.

Congress may also pass other changes to health reform this year, including an easing of requirements on what people can buy with their health savings accounts and other similar health insurance savings vehicles. Paulsen is also pushing to make research and development tax credits permanent.

Speaking to a group with a large number of medical technology executives, Paulsen also called for a more industry-friendly U.S. Food and Drug Administration. “They’re making it really challenging for companies that want to bring a product to market.”

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By Chris Newmarker

Chris Newmarker is a Minnesota-based business journalist.
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It would be nice if the Congressman and others would focus on the real culprit of out-of-control medical spending: imaging self-referral by clinicians. How about limiting the tax to those who buy machines to which they can refer and thus churn technical fees? Imaging self-referral costs this country $16 billion annually. I believe eliminating it would cover the revenue lost by applying the tax only where appropriate.