In the nine years since it was enacted, Obamacare, also known as the Affordable Care Act (ACA), has provided the guardrails for health coverage for millions of Americans. Although I still support the full repeal of the law, the existing law is a reality that the market has adapted to and consumers have become reliant upon. As bad as the law is, the law is far better than the alternative being proposed by progressives who want to repeal Obamacare and replace it with a single payer government run system.
Conservatives are in the horrible position of cleaning up Obamacare to protect against a Medicare-for-All socialized health care system. When President Obama’s health care law was in place, Republicans campaigned and took actions (including a government shut down) to uproot the law “root and branch.” Now, Democrats are the ones trying to repeal and replace Obamacare with a single payer government run system and Republicans, and some moderate Democrats, are the ones strategically defending existing law to prevent all out socialism in health care. Ironic.
Conservatives need to stomach the reality that President Obama’s health care law is going nowhere fast. It is time to look at provisions in existing law and repealing the most harmful elements of that law. Especially provisions that were merely added to the bill that even the authors knew was bad policy, yet they were added to lower the price tag of the bill to fool the American people into believing he law would save money. Targeted tax provisions in the bill were put in place to lower the sticker price and they need to be repealed to provide fairness and balance to the health care system.
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One in particular is leading to lowered health care outcomes.
Take, for example, the law’s excise tax on the sale of medical devices. Originally envisioned as a way to raise revenue to partially fund health insurance subsidies, the device tax applies a 2.3 percent excise tax to a wide range of medical equipment and supplies – from pacemakers and artificial joints to surgical gloves and MRI machines. According to proponents of this policy, any negative economic consequences of the tax would be outweighed by increased demand for devices, as more Americans obtained access to healthcare.
Unfortunately, reality has proved far different.
When the tax was first put into effect in 2013, sales of medical devices plummeted by $188 million and the industry estimated a loss of nearly 30,000 good paying jobs. This period also saw a lag in innovation investment as smaller firms and young start-up companies struggled to absorb the tax and were forced to shift millions of dollars away from research and development activities. One estimate found that research and development spending fell by $34 million during the time the tax was in effect. The expected revenues the tax was created to produce have also failed to come to fruition – generating about $2.1 billion less than projected estimates.
Fortunately, the myriad failures of this policy were not lost on Congress. Recognizing its harmful effects, members from both parties have overwhelmingly voted to suspend the tax several times since 2015. Though these temporary suspensions are a positive step, they do not represent a long-term solution. Starting in January 2020, the medical device tax will once again take effect and threaten investments into research and development, jeopardizing patient access to the next generation of medical treatments and technologies.
If we are going to live with the existing health care laws on the books, it makes sense to make the law better. To be honest, the Medical Device Tax was an accounting gimmick to make the law look like it would cost less to the taxpayers. Now that the real-world impact of these taxes, in devastating the medical device tax industry and hurting consumers access to these devices, has been felt and it hurts ill people who need access to medical devices. Taxes that target and punish certain sectors of the industry end up driving the investors in these businesses to other areas of the economy. The result is that people have been harmed by not having access to devices that help them to combat illness and live better lives.
It’s no longer enough to kick the can down the road, leaving an entire industry precariously poised to pay a huge tax bill based on the whims of Congress. Instead, it’s time for lawmakers – Democrats and Republicans alike – to admit the device tax should be repealed for the good of the economy, for the good of innovation, and for the good of sustaining access to healthcare for countless Americans.
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