Coalition seeks repeal of tax on medical devices

Levy will result in loss of jobs, opponents claim

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WASHINGTON -- Saying it is a threat to jobs and the economy, a coalition of lawmakers Thursday introduced legislation to repeal a new tax on medical devices expected to cost manufacturers nearly $30 billion over the next decade.

A similar repeal bill passed the House last year but was blocked in the Senate.

Sponsors include Pennsylvania Sens. Pat Toomey and Bob Casey.

The 2.3 percent excise tax was implemented as part of the federal Affordable Care Act, and its revenue is meant to help offset the cost of health care for poor people. It applies to a wide range of "devices," from bed pans to surgical equipment.

"The tax is discouraging companies both in Pennsylvania and across the United States from growing and planning their futures," said Mr. Toomey, a Republican. "This job-killing tax is yet another example of how President [Barack] Obama's health care bill is hurting American jobs and undermining the economy."

Mr. Casey, a Democrat, said it is common sense to repeal the tax in order to encourage innovation and job creation.

"I have talked to small businesses and manufacturers throughout Pennsylvania that have been unfairly burdened" by the tax, he said.

Device manufacturers are encouraged by the renewed effort.

"The biggest issue is that this tax is a tax on innovation, and it taxes even companies that have not yet made a profit," said Christopher P. Molineaux, president of Pennsylvania Bio, a trade group representing 500 bioscience companies in the state.

"It forces companies to freeze hiring or let people go or reduce their investment in research and development of new products. It has a chilling effect on new innovation that ultimately benefits patients so the effect is going to be to hurt patients," he said.

Manufacturers employ about 22,000 people in Pennsylvania and contribute about $13.1 billion a year to the economy.

Some Democrats have said that such repeal efforts are aimed at chipping away at the president's signature health care legislation.

Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association, said his group's top priority is repealing the device tax. He has the ear of Sens. Orrin Hatch, R-Utah, and Amy Klobuchar, D-Minn., who are leading the repeal effort.

Mr. Hatch said: "Whacking medical device manufacturers with a near $30 billion tax hike stifles the development of life-saving medical devices with the high costs that will ultimately be passed on to consumers."

Mr. Obama has said he opposes efforts to repeal the tax. He said the Affordable Care Act-- which greatly expands the number of people covered by health insurance -- would increase customers for medical device manufacturers.

state - businessnews - health

Bureau chief Tracie Mauriello: 703-996-9292 or tmauriello@post-gazette.com.


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