ONCE AGAIN, Congress seems set to prove it can be bipartisan — when the challenge involves caving in to special interests. Republicans and Democrats look set to repeal the Affordable Care Act’s medical device tax, a 2.3 percent excise on manufacturers of everything from sutures to pacemakers to MRI machines. The winners would be an influential lobby and rank hypocrisy. The loser would be the country.
The more than 7,000 firms in the medical device industry have spent $30 million a year since 2008 lobbying Congress. Nearly 400 lobbyists are working on the issue. Members of both parties have taken hefty campaign contributions from the industry. Powerful lawmakers have come to the defense of medical device manufacturers. The Obamacare-hating Senate majority leader, Mitch McConnell (R-Ky.), put repealing the medical device tax in the top tier of priorities for the new Congress. But Democrats such as Sens. Al Franken (Minn.) and Elizabeth Warren (Mass.) also back repeal; both their states contain a large number of medical device companies.
The gall on both sides is astounding. Republicans who supposedly care about the federal deficit are racing toward repealing a source of federal revenue without a plan for shoring up the budget, which would take a nearly $30 billion hit over 10 years. Democrats who favor levying taxes to pay for national priorities such as health care apparently draw the line when the special interests in their states get upset.
The medical device tax isn’t particularly elegant policy. But it accomplishes its goal of helping to fund health care for the poor and middle class without dealing unreasonable damage to the economy. The Congressional Research Service concluded as much in a report it prepared for lawmakers this month. Using straightforward supply-and-demand analysis, the analysts estimated that job losses relating to the tax probably range from 0 to 1,200 — the high end representing 0.2 percent of industry jobs.
Medical device manufacturers cite much larger job-loss numbers, but they are based on industry surveys a Post fact check found to be unreliable. Absent years of data that are not yet available, the Congressional Research Service’s Jane G. Gravelle told us, there’s no other way to fairly evaluate the effects of the tax than the way the CRS did. Surveys of executives asked to evaluate a tax on their own industry and anecdotal accounts aren’t compelling.
There is more at stake in the medical device tax repeal effort than $30 billion in revenue. If the medical device industry gets a break, others hit with similar taxes and fees will demand one, too. In that broader view, about $165 billion in federal revenue over 10 years is on the line.
Despite all of the pressure for repeal, the effort may yet founder on legislative mechanics. Republicans might propose cutting spending to offset the repeal. Democrats would resist that. It would be better if Congress just did the right thing, for the right reason.