Letter to Key U.S. Senators in Support of Funding for the Affordable Care Act

A version of this letter was sent to key lawmakers in the Senate.

April 2, 2013

The Honorable Tom Harkin, Chairman
HELP Committee
United States Senate
Washington, DC 20510

Dear Chairman Harkin,

Like you, members of the Patient, Consumer, and Public Health Coalition are very supportive of the Patient Protection and Affordable Care Act (ACA).  We were extremely disappointed that the Hatch-Klobuchar amendment (S. Amdt. 297 to S. Con. Res. 8) to repeal the 2.3% excise tax on medical devices was overwhelmingly supported. Thank you very much for your important vote against the amendment.  We are writing to ask for a meeting with your staff to discuss this issue.

The ACA is dependent on the excise tax and other funding to help pay for affordable health insurance for millions of previously uninsured Americans.  Repealing the excise tax on medical devices would cost more than $29 billion over 10 years, according to the Joint Committee on Taxation.[1]   We agree with The Washington Post March 22, 2013 editorial, which noted that asking the medical device industry to help pay for the ACA “doesn’t seem unreasonable, given the $100 billion-plus sector’s profitability—which is bolstered by federal programs such as Medicare and Medicaid.”[2]  The editorial also noted that the medical device “industry’s doomsday scenario” about the tax eliminating jobs and hurting exports of devices “falls apart on closer inspection.”  The editorial correctly stated that the tax does not apply to devices sold overseas, and “there’s little reason to suppose the tax will destroy 43,000 jobs, which is the number industry lobbyists have been tossing around the halls of Congress.”

Those job-loss numbers are from a study funded by the device industry, according to The Nation.  They explain that the tax applies on medical devices sold in the United States, not manufactured here—so moving a plant to Mexico doesn’t change anything. Medical device companies would have to stop selling their products in the United States to escape the levy, which is simply unbelievable. The American healthcare market is by far the most lucrative in the world, as the country spends more on healthcare than any other by many orders of magnitude. No company is likely to leave the American market or even to reduce sales in order to avoid a 2.3 percent tax.”[3]  Similarly, Bloomberg Government concludes that the AdvaMed study’s job-loss figures “conflict with economic research, overstate companies’ incentives to move jobs offshore, and ignore the positive effect of new demand”3 since millions more patients will have coverage for medical devices, which means higher profits.

Every time a patient sees a health care provider, a myriad of medical devices may be used, such as screening tests, needles, antiseptic wipes, ultrasound, CT scans, and MRIs.  And of course, more insured patients means more cardiac devices, orthopedic implants, and many other implants and diagnostic devices will be needed.  Medical devices are used by patients of all ages, and many of them are not on Medicare. For example, over the last decade, the demand for knee replacements for people between the ages of 45 to 64 has tripled.[4] 

The tax will be paid mainly by large device companies with the ten largest medical device makers estimated to pay 86 percent of the excise taxes.[5]  Experts calculate that the excise tax effect on the medical device industry will be “trivial.”[6]The tax will have little impact on consumers because taxable medical devices represent less than 1 percent of total personal health expenditures.  Even if the manufacturers pass on the cost of the tax to consumers, it would have almost no impact on the cost of health insurance.

Opponents of the ACA have been working overtime to defund the Act. CQ News reported that Senate Republicans “issued statements praising the amendment as a way to get at the health care law.”[7]  Although the Hatch-Klobuchar amendment is not binding, it sets a terrible precedent that will encourage others to try to undo crucial funding provisions in the ACA.

We thank you for voting no on the Hatch-Klobuchar amendment.  As a strong supporter of the Affordable Care Act and a champion of fairness, we urge you to strongly oppose future efforts to repeal the medical device excise tax, such as S. 232.  Please let us know how we can help you ensure that the ACA is not undermined by powerful special interests, such as the medical device industry.  Millions of uninsured Americans are counting on you.

American Medical Women’s Association
Breast Cancer Action
Community Catalyst
Connecticut Center for Patient Safety
Families USA
Health Care for All
Jacobs Institute of Women’s Health
National Consumers League
National Organization for Women
National Research Center for Women & Families
National Women’s Health Network
Our Bodies Ourselves
The TMJ Association
WoodyMatters
For more information, contact Paul Brown at (202) 223-4000 or at pb@center4research.org

 

 


[1] Joint Committee on Taxation (May 29, 2012). Description of H.R. 436, the Protect Medical Innovation Act of 2011. https://www.jct.gov/publications.html?func=startdown&id=4431

[3] Zornick G (March 24, 2013). Bipartisan Push to Scrap Medical Device Tax is a Cautionary Tale, The Nation. http://portside.org/2013-03-24/bipartisan-push-scrap-medical-device-tax-cautionary-tale

[4] Lloyd, J (February 12, 2012). Baby Boomers’ demand, expectations for new knees soar. USA Today. http://usatoday30.usatoday.com/news/health/story/health/story/2012-02-10/Baby-Boomers-demand-expectations-for-new-knees-soar/53032708/1

[5] Medical device tax would mostly hit the biggest firms (March 24, 2010). MedCity News. http://medcitynews.com/2010/03/medical-device-tax-would-mostly-target-the-biggest-companies/print/#comments_controls

[6] Left to their own devices: Medtronic and the woes of America’s medical-technology industry (September 10, 2011). The Economist. http://www.economist.com/node/21528644/print

[7] Attias M. (March 22, 2013).  Opponent of Device Tax Encouraged by Senate Vote, CQ Roll Call News.