Medical device industry increases pressure for repealing U.S. sales tax

     Protesters gathered outside 30th Street Station to oppose the medical device tax. Many work for B. Braun Medical Inc. in Allentown, Pennsylvania. (Emma Lee/WHYY)

    Protesters gathered outside 30th Street Station to oppose the medical device tax. Many work for B. Braun Medical Inc. in Allentown, Pennsylvania. (Emma Lee/WHYY)

    When legislators formulated the Affordable Care Act, a 2.3 percent tax on medical devices was added to raise revenue. But industry leaders have pushed back, and many lawmakers are now reconsidering.

     Speaking at a rally in Philadelphia on Tuesday, Caroll Neubauer, chairman and CEO of B. Braun Medical Inc., said the tax on medical devices was responsible for cutting more than 30,000 industry jobs over two years. He implored Congress to repeal the tax.

    “Please do the right thing for our industry, the American economy, and foremost for our patients,” he said.

    The House and Senate each have introduced bills to repeal the tax this year, with bipartisan  co-sponsors including U.S. Sens. Pat Toomey and Bob Casey from Pennsylvania.

    “To think that we tax alcohol and tobacco to discourage use while we simultaneously are now taxing medical device[s] doesn’t really make a lot of sense,” said first-term U.S. Rep. Ryan Costello of Pennsylvania at the rally.

    Despite growing support, a recent nonpartisan report from the Congressional Research Service estimated employment and output to be reduced by just 0.2 percent.

    “I think the concern is almost entirely unjustified,” said Henry Aaron, a senior fellow at the Brookings Institution.

    He noted the tax is not levied on exports, and because most medical devices are purchased through insurance, it’s unlikely a small increase in price would harm sales.

    “If one takes the whole Affordable Care Act into account,” he added, “sellers of durable medical equipment stand to gain because more people will be insured.”

    The tax is applied to products such as X-ray machines and surgical implants, but not to retail items such as contact lenses, wheelchairs, or hearing aids.

    Over 10 years, the tax is expected to pull in net revenue of nearly $30 billion. If repealed, Aaron said,  lawmakers would have to find another way of generating those funds.

    Tauyna English contributed to this report.

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