Indiana’s two senators are sponsoring a bill that would repeal the medical device tax. The 2.3 percent tax went into effect in January 2013 as part of the Affordable Care Act.
Senator Joe Donnelly, who has sponsored legislation in the past that would repeal the tax, says that it is “past time to repeal the medical device tax.”
“I am pleased to continue supporting this bipartisan legislation and am hopeful that the Senate will act quickly to consider it,” Donnelly said.
Senators Joe Donnelly and Dan Coats were among the 41 co-sponsors of the original bill from 2013.
The tax is levied on certain medical devices such as X-ray machines and MRIs.
A number of medical devices are exempt from the tax, including contacts, glasses, and hearing aids. Wheelchairs, pregnancy kits and other items “generally purchased” at retail for individual use are also exempt from the tax.
Senator Orrin Hatch (R-UT) was far more critical of the medical device tax. A press release from his office claimed that the tax would cost 33,000 jobs, a figure that is based on a trade group report.
“Every dollar medical device manufacturers spend on this onerous tax is a dollar taken away from American innovation, job growth, and the ability to provide groundbreaking medical technologies to patients in need,” Hatch said.
The non-partisan Congressional Research Service found that the tax would not have much effect on jobs. Their report says that the ACA would boost demand for medical devices and likely “more than offset” the cost of the tax — which is deductible for businesses subject to income taxes.
The Congressional Research Service estimates that the tax will have between a net zero impact on jobs and a reduction of 1,200 jobs (equal to 0.2% of the entire industry). They do warn that that cost could be passed on to consumers, which is assumed in their high-end estimate of potential job losses.
As for its chances of becoming law, the Senate bill is likely to see a companion bill pass in the Republican-controlled House of Representatives. It is not clear if there are enough votes in the Senate to overcome a filibuster.
The tax is estimated to bring in $29 billion over ten years. It is one of several financing mechanisms included in the ACA. Sponsors of the Senate bill — which is mostly backed with Republican support and a handful of Democrats — have not offered any funding replacement, meaning that their bill would add to the deficit.