Medical-device tax up for repeal
It's so much easier for Congress to spend than it is for Congress to raise revenue necessary to support spending.
A vote last week in the U.S. Senate highlights the sometimes-foolish inconsistency of our federal legislators — their penchant for passing hugely expensive programs they are reluctant to pay for.
There is no doubt that President Barack Obama's Affordable Care Act — Obamacare, as it is known — will be expensive and that paying for it will require substantial increases in health care premiums for individuals and families — as well as substantial tax increases, some of which are yet to be revealed.
But one source of revenue for Obamacare is well known — it's a 2.3 percent excise tax on makers of medical devices. The provision already took effect on Jan. 1, and it is expected to generate substantial revenue. One news report estimated that Massachusetts medical-device-makers alone will pay more than $400 million.
As taxes go, this one is a real clunker. For starters, it's not a tax on business profits. It's a tax on gross sales, meaning that even if a company is not profitable, it still is liable to pay the tax.
That chilling effect has some companies promising to cut back their research budgets, reduce the number of their employees and pass the cost on to hospitals and patients.
It's a truism that taxing something means that you get less of it — meaning that medical-device-makers will face a serious disincentive to pursue the kind of medical advances that can be not just life-changing, but life-saving. So it's not a step forward in terms of improving medical care.
Obviously not well-conceived, the medical-device tax proposal was included among the 1,000-plus-page Obamacare legislation, a bill that largely went unread by legislators, and it was passed into law.
But now legislators, hearing complaints from constituents, are talking about repealing the tax.
Last week, the Democratic-controlled U.S. Senate voted 79-20 in favor of repeal. The vote had more symbolic than substantive meaning because it came on a nonbinding resolution.
But the numbers — far more than necessary to overturn a possible veto by Obama — speak volumes. Meanwhile, legislation in the U.S. House to repeal the tax has 212 co-sponsors.
U.S. Sen. Amy Klobuchar, a Minnesota Democrat who is leading the charge for repeal, has vowed she will "continue to work to get rid of this harmful tax so Minnesota's medical-device businesses can continue to create good jobs in our state and improve patients' lives."
Another state hard hit by the medical device tax is Massachusetts, where Democratic U.S. Sens. Elizabeth Warren and William "Mo" Cowan, a recent appointee who replaced former U.S. Sen. John Kerry, also are working for repeal.
One, of course, might ask why many of the same U.S. senators who passed the medical-device tax are now working to repeal it. There is no good answer.
It's no surprise that Republicans oppose the tax. They never supported it in the first place. But the same cannot be said for Senate Democrats.
The problem is that even if the medical-device tax is repealed, the spending for Obamacare will go on. If this source of funding for Obamacare is ultimately eliminated, the cost will simply be added to our federal budget deficit and national debt.
Providing benefits but not paying for them was one of the major problems with President George W. Bush's decision to expand prescription-drug benefits for Medicare recipients. It's apparent the country is headed down the same path with Obamacare.