U.S. House passes bill ending tax on medical devices

The United States House of Representatives passed the Health Care Cost Reduction Act of 2012 on Thursday by a 270-146 vote.

The bill, co-sponsored by Indiana Representatives Todd Young and Mike Pence, intends to repeal a 2.3-percent tax on medical devices imposed under President Barack Obama’s Affordable Care Act.

The medical industry is heavily centered in Indiana, Young said in a press release, and the tax on medical devices would have negative impacts on the state. If the Health Care Cost Reduction Act is not enacted, the medical device tax will begin in January 2013.

“The medical device industry employs more than 20,000 Hoosiers, with nearly 6,800 in Warsaw alone,” Pence said in a press release. “Every day these researchers, scientists, technicians and high-tech manufacturers produce a multitude of life-saving and life-enhancing products that are sold around the world, generating an economic impact of more than $10 billion in Indiana.”

The tax could also have an impact on the economy in Bloomington, where Cook Medical is headquartered. Cook Medical is the nation’s largest privately owned medical device company and has plants in Indiana, Illinois, North Carolina, California and Pennsylvania.

“This repeal is vital to patients and their caregivers who want their critical-care devices manufactured in the U.S.,” Steve Ferguson, chairman of the board of Cook Group, parent of Cook Medical, said in a press release. “The threat of this imminent tax has already led companies to move existing manufacturing offshore and plan for future growth outside the U.S.”

In addition to the repeal of the medical device tax, H.R. 436 would repeal limitations on the purchase of over-the-counter medications under the ACA. It would also make changes to the use of health savings accounts and flexible spending accounts.

“This tax would be devastating to Indiana and to device manufacturers across the country,” Young said in a press release. “Indiana is recognized internationally in this industry because dozens of medical device manufacturers are headquartered here, and 20,000 Hoosiers work in this field. I’m proud to co-sponsor and vote for a bill to protect Indiana jobs.”

The Congressional Budget Office and the staff of the Joint Committee on Taxation estimate this bill would increase the deficit by $2.2 billion in 2013 and $3.2 billion during the 2013-17 period but decrease the deficit by $6.7 billion during the
2013-22 period.

That total reflects on-budget savings of about $9.2 billion and off-budget costs of about $2.5 billion, according to the CBO.

“We applaud the U.S. House of Representatives, which today passed bipartisan legislation that repeals the medical device tax,” Ferguson said. “We hope the U.S. Senate will act in the near future. If not repealed, this tax will lead to U.S. technology and jobs being relocated outside the U.S. Further, we will see a loss in future jobs and delays in the latest medical innovations being available to American patients. Americans want their critical devices manufactured in the U.S. and to have access to the latest medical technologies.”