Republican knives out for Obama's medical devices tax

Reuters News
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Posted: Nov 12, 2014 5:35 PM

By Kevin Drawbaugh

WASHINGTON (Reuters) - Republicans in the U.S. Congress will soon move to kill a medical device tax imposed less than two years ago under President Barack Obama's healthcare law, congressional aides and analysts said on Wednesday.

The 2.3-percent excise tax on sales of most medical devices sold in the United States helps fund the law, known as Obamacare, and applies to products ranging from bedpans to heart pacemakers. It took effect in January 2013 and is projected to raise about $30 billion in government revenue over 10 years.

Though no full-scale repeal of Obamacare is expected, even with the Senate now under Republican control, the move against the tax is part of efforts to gradually chip away at the law.

Last week's elections will elevate Republican Senator Orrin Hatch, a long-standing opponent of the tax, to the chairmanship of the tax-writing finance committee in the Senate.

"The senator will continue to examine and support every viable opportunity to permanently repeal Obamacare’s onerous tax on medical devices," said his spokeswoman Julia Lawless.

The Senate in March 2013 approved a symbolic resolution calling for repeal of the tax, with more than 30 Democrats joining Republicans in support of the non-binding measure.

Opposition to the tax is also widespread in the House of Representatives, so there is a strong chance it could be repealed. Republicans held the majority there even before the elections and voted on 50 occasions to repeal all or part of Obamacare.

Should the tax be scrapped, it would represent a loss of under 3 percent of the funding Obamacare is expected to need over the next ten years, which is estimated at over $1 trillion.

"Repeal of the medical device tax has once again become a rallying cry for the Republicans ... and now they have the congressional majority to potentially do something about it," said analysts at BernsteinResearch in a client note.

The tax has been projected . Medical device companies have lobbied against it on Capitol Hill.

Repeal could boost their profits by 1 to 5 percent a year, the Bernstein analysts said, naming possible beneficiaries as Medtronic Inc, Johnson & Johnson, Abbott Laboratories, Baxter International, St. Jude Medical Inc and Stryker Corp.

(Corrects projection in second paragraph to $30 billion over 10 years)

(Editing by Andrew Hay)