Paulsen takes aim at medical device tax again and is ready for success

WASHINGTON – Rep. Erik Paulsen on Tuesday introduced a bill to kill the medical device tax that is part of the Affordable Care Act (ACA).

Paulsen, whose district is home to many medical technology companies, has tried three times without success to end the 2.3 percent excise tax on device sales since it was included in the 2010 health care bill and took effect in 2013.

The fourth time around, his chances are much better.

In 2015, Paulsen got a device tax repeal through the House with a lopsided bipartisan vote. But the Senate would only agree to a two-year suspension on collection of the tax for 2016 and 2017. With collections set to start again in January 2018, Paulsen is going for the coup de grace with a GOP-controlled House, Senate and White House that have made repealing the ACA a top priority.

The device tax repeal "is probably going to get put into a budget reconciliation [with the rest of the ACA repeal] that only needs a simple majority vote in the Senate," said Steve Parente, a professor and director of the Medical Industry Leadership Institute at the University of Minnesota.

President Obama, who made the ACA the signature legislation of his first term, always threatened vetoes of efforts to overturn it, including budget reconciliation. President-elect Donald Trump, who takes office Jan. 20, "will sign it for sure," said Parente.

A free-standing device tax bill would have needed a 60-vote Senate majority to end debate. That had been a stumbling block in the past.

The fact that the tax was suspended after it had been collected for two years spoke to the lobbying strength of the medical device industry, which employs thousands in Minnesota and spent millions of dollars trying to bring the tax down.

Paulsen and co-sponsor Ron Kind, a Wisconsin Democrat, adopted the industry's talking points in opposing the tax as a job killer that also took money away from research and development.

"We are already seeing new American jobs and increased investment in research and development as a result of the temporary suspension of this tax," Paulsen said in a statement Tuesday. "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."

AdvaMed, the trade group representing most of the country's biggest device makers, including Medtronic and St. Jude Medical, praised Paulsen and Kind.

"AdvaMed commends the bill's cosponsors for their leadership on this issue," AdvaMed Chief Executive Scott Whitaker said in a statement. "The strong bipartisan support they have gathered behind their bill makes it clear that a majority of members recognize the urgency to permanently repeal this anti-job, anti-innovation and anti-patient tax."

Democratic Sens. Amy Klobuchar and Al Franken of Minnesota voted for the overall health care bill, which included the device tax. They have since worked to get rid of the tax.

Supporters of the health care law, such as the Center on Budget and Policy Priorities (CBPP), saw the device tax as a fair way for device makers to support change that would bring them more revenue as more Americans were covered by health insurance.

Now, even those who backed the tax seem resigned to its fate.

"With the change of administration, the political climate will change substantially," said Paul Van de Water, senior fellow at CBPP. "The odds of repeal are much higher."

Jim Spencer • 202-662-7432