Back in June when the House of Representatives voted to repeal the medical device tax that the industry believes will kill jobs and stifle innovation, Representative Erik Paulsen (R-MN) likely believed that he might achieve the impossible: throw out that portion of the healthcare law completely.
The wind was at his back with 37 Democrats joining their Republican counterparts to repeal the 2.3 percent device tax that is set to go into effect in January.But despite Paulsen’s best efforts, the Senate has not brought the bill up for a vote.
He may not admit it outright but it appears that these days, Paulsen, who was the chief author of the bill to repeal, is recognizing that the battle may as well be over.
An industry champion, Paulsen still vowed to fight on asking an audience of medical device executives gathered at the Medical Devices Summit Midwestin Bloomington, Minnesota on Thursday to write to their senators and persuade them to bring the bill to the floor after the election. Note those words: after the election.
“This is a ticking time bomb that must be stopped,” he said. “You got to push this out.”
In an interview after the speech, Paulsen said that there is a “realistic opportunity for maybe delaying the tax.” When asked if there would be an appetite for tackling this after the election, he replied “yes.”
But that seems optimistic, especially if the Democrats prevail.
Part of the problem appears to be that the titans of the industry that he refers to, including Medtronic, have not really come out forcefully against the tax. In fact, even when asked point blank to comment about the medical device tax at a July healthcare conference in Philadelphia, a senior Medtronic executive did not take the bait, even as a smaller company’s CEO criticized it openly.
Paulsen said that St. Jude Medical just laid of 300 employees and the move was considered to be taken to offset the cost pressures of the device tax. Yet, unlike Stryker, St. Jude Medical, also a medical device titan, did not causally link the layoffs to the tax.
What’s more, an effort to rally medical device industry to rise up in unison against the device tax has also failed miserably.
The owner of the LinkedIn Medical Devices group, boasting more than 133,000 members, launched a campaign to collect at least 25,000 signatures on a petition to be sent to the Senate in April. As of Sept. 6, the effort had stalled garnering only 8,878 signatures.
In Thursday’s keynote speech, Paulsen described the device tax as ill conceived and wondered aloud why the medical device industry was singled out to pay it. While the tax may be ill conceived, especially at a time that the device industry is facing many different headwinds, perhaps the tax is payback for years of incredibly high profit margins and opaque pricing.
Even the nonpartisan Government Accountability Office was flummoxed by industry’s pricing when it attempted to analyze it.