WASHINGTON – The House included a measure killing the medical device excise tax in its 2020 spending package, which now heads to the Senate for approval.
The medical technology industry, including hundreds of Minnesota companies, fought unsuccessfully for years to permanently kill the 2.3% tax on gross sales of medical devices that became law as part of the 2010 Affordable Care Act.
Collection of the tax began in 2013, as set out in the health reform law. But device makers, who spent millions of dollars lobbying against the tax, succeeded in having its collection suspended since 2016.
After a four-year hiatus, the tax was set to take effect again in January.
Scott Whitaker, CEO of the Advanced Medical Technology Association (AdvaMed), celebrated inclusion of the device tax repeal in the House resolution.
No longer facing the uncertainty of when the tax might return, Whitaker said, "the U.S. med-tech industry — the world leader in medical innovation — can focus now on developing the next generation of treatments and cures for patients in need, and creating good-paying, high-tech jobs in communities across the country."
The tax hurt small and midsize device and technology companies more than big corporations because it was based on sales rather than profits. Startups encumbered by debt were especially vulnerable.
The House passed bills repealing the device tax in 2015 and 2018 only to have them stall in the Senate. In 2015, the Obama administration threatened to veto a repeal. Democrats feared that repeal was a first step in Republican plans to undercut the funding mechanisms for the entire Affordable Care Act.
