Medical device tax could play a role in spending negotiations

Catheryn Carroll, of Washington DC, berates members of the House Republican caucus while they hold a press conference on the steps of the U.S. Senate September 29, 2013 in Washington, DC. The House of Representatives passed a continuing resolution with language to defund U.S. President Barack Obama's national health care plan Saturday, but Senate Majority Leader Harry Reid has indicated the U.S. Senate will not consider the legislation as passed by the House. 

Over the weekend, lawmakers didn’t agree on a spending bill to keep the government up and running.  The House’s bill is tied to a one-year delay of the Affordable Care Act.  The Senate’s Democratic leadership says that is a nonstarter. 

While there doesn’t seem to be much room for negotiation, there may be a small patch of common ground.

The medical device tax is a 2.3 percent tax on things like insulin pumps and defibrillators. It’s one of a handful of new taxes on the health care industry in the Affordable Care Act.

“There’s taxes on pharmaceutical companies, on hospitals,” Tim McBride says. He is a scholar at the Institute for Public Health at Washington University in St. Louis. “There’s a fee given by the insurance companies.”

An estimated 30 million Americans who don’t have health insurance are expected to get insurance, and that means the health care industry will get millions of new customers.

“The argument is they’re going to do better,” Michael Sparer says. He is a professor of health policy and management at Columbia University’s Mailman School of Public Health. “If everyone is insured, then the providers and the makers of the medical devices and everyone else does a little bit better. So under that theory, they can pay a little tax to help pay for it.”           

But the companies who make these devices say that isn’t happening, and it is hurting their bottom line.

There are some Democrats who side with the companies, but President Obama and Senate Majority Leader Harry Reid have said they are not interested in any spending bill that would change the health care law.

About the author

David Gura is a reporter for Marketplace, based in the Washington, D.C. bureau.

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