For the first time in weeks, Congress moved to take bipartisan action. But this wasn’t a move to satisfy Washington’s desire for a “grand bargain. Rather, it was an effort in the opposite direction. By a 79 to 20 vote, the Senate passed an amendment to the GOP budget that would repeal the tax on medical devices — a key part of President Obama’s health care law. It’s a symbolic move — there’s no chance the GOP budget will pass the Democratic-controlled Senate — but it says a lot about the actual priorities of our lawmakers, and in particular, the deficit hawks.
The excise tax was enacted to help pay for the expansion of health care coverage under Obamacare. In fact, it’s one of several taxes imposed on various elements of the health care industry. The rationale, beyond raising revenue, is straightforward. By rooting health care reform within the private sector, the Affordable Care Act is something of a huge subsidy to hospitals, health insurance companies, pharmaceuticals, and device manufacturers.
In expanding health coverage to 27 million more Americans, Obamacare will generate new demand for medical services, and increase revenue for most stakeholders, including device manufacturers. The excise tax is meant to capture some of that value, and direct it to new services. Over the next ten years, according to the Center on Budget and Policy Priorities, the excise tax will raise $29 billion. If Congress hews to pay-as-you-go procedures, repealing the tax will require lawmakers to increase other taxes or reduce benefits for recipients. If it doesn’t, then repealing the tax will increase the deficit.
It’s that latter point which makes this move especially interesting. For most of the year, Republicans have been obsessed with the deficit. Just last week, a collection of GOP senators expressed their hopes for a “broad deficit reduction deal.” “[W]hat we talked about today is how do we come together in a bipartisan way on this to truly address the debt and the deficit in this next four-month time frame,” said North Dakota Senator John Hoeven, after having dinner with President Obama.
As far as reducing the deficit is concerned, the medical device tax is low-hanging fruit — it offsets costs and doesn’t do much to harm the industry in question. And yet, Republicans and Democrats came together in a “bipartisan way” to express their support for ending it.
Here’s what this should tell you: Few lawmakers are concerned with reducing the deficit. Instead, they seek to represent their constituents and pursue particular ideological agendas. Republicans who oppose the medical device tax have an easy way of squaring the circle — it’s not that they care about the deficit as much as they want to dismantle the social safety net, of which Obamacare is (now) an integral part. Increasing the deficit is a small price to pay, it seems, for chipping away at the president’s signature accomplishment.