Lawmakers support medical device tax repeal

Congressional Republicans are calling for the repeal of a 2.3-percent excise tax on medical devices as a compromise to begin budget and debt ceiling negotiations.

The repeal would affect Hoosier firms that manufacture medical devices such as catheters and surgical stents.

Cook Medical, the world’s largest private medical device manufacturer, is headquartered in Bloomington, and its local facilities employ more than 2,000 people.

Dan Peterson, vice president of industry and government affairs for Cook Medical, said Cook Medical supports a full repeal of the medical device tax.

The medical device tax was implemented in January 2013 to build revenue to provide health insurance for millions of Americans under the Affordable Care Act.

The potential repeal has bipartisan traction. The Democrat-controlled Senate voted 79-20 in favor of a non-binding budget resolution to repeal the medical device tax on March 21, 2013. Thirty-four Democrats voted in support of the resolution, including Indiana Democrat Sen. Joe Donnelly.

In the days preceding the government shutdown, the Senate refused the House’s budget proposal that would delay the Affordable Care Act’s implementation by one year and repeal the medical device tax.

On Oct. 3, 2013, congressional leaders from Indiana sent a letter to Senate Majority Leader Harry Reid and Speaker of the House John Boehner asking to include a full repeal of the medical device tax in any must-pass legislation considered in the House or the Senate this year.

Sen. Dan Coats, R-Ind.,  and all Republicans representing Indiana in the House, signed the letter. 

The medical devices industry is one of Indiana’s most valuable economic assets, employing more than 20,000 people and generating more than $10 billion of annual economic output, according to a 2012 report by BioCrossroads, an institution supporting life science innovation in Indiana.

Peterson said although Cook Medical has not had to lay off any employees due to the tax, it has had to put expansion plans on hold.

“Over the past few years we’ve built over four new plants in the Midwest expanding our production capacity, but with the new excise tax, we have had to put those plans for further expansion on hold,” Peterson said.

Peterson said Cook Medical is actively involved with lobbying those in decision-making positions so it is aware of the tax’s consequences.

“Everybody acknowledges the cost of health care is too high,” Peterson said. “Our main concern is that the way they went about solving the issue really hurts
our industry.”

The Indiana Republicans’ letter cites not only the potential loss of jobs, but also the potential risk to the industry’s ability to research and innovate.

“Indiana is home to over 300 medical device companies that produce lifesaving products,” according to the letter. “This tax is prohibiting their ability to conduct research or clinical trials to create new medical devices.”

Follow reporter Brianna Meyer on Twitter @brimmeyer.