This post first appeared in The Nation on September 28, 2013.
The sun rises behind the White House in Washington, Sunday, Sept. 29, 2013. Locked in a deepening struggle with President Barack Obama, the Republican-controlled House approved legislation early Sunday imposing a one-year delay in key parts of the nation's health care law and repealing a tax on medical devices as the price for avoiding a partial government shutdown in a few days' time. (AP Photo/Carolyn Kaster)
Today, House Republicans pushed one more step towards a government shut down by coalescing around a continuing resolution that delays the implementation of the Affordable Care Act (ACA) by one year, while permanently repealing one of the primary funding mechanisms for the law, a 2.3 percent excise tax on medical device companies.
While its clear that Democrats will reject any delay of health reform, the move to revoke the medical device tax can be seen as a coup by industry lobbyists. The medical device industry, led by AdvaMed, a trade association that spends $29 million a year, has pushed aggressively to ensure that medical device companies contribute nothing to the financing of the ACA.
After the tea party catapulted House Republicans into the majority, 75 right-wing lawmakers wrote a letter to Speaker Boehner demanding that a vote to repeal the device tax occur “as soon as possible.” The metadata of the letter shows that it was authored by Ryan Strandlund, a member of AdvaMed’s government affairs team.
While repeal proponents claim the tax will hurt innovation and devastate American devicemakers, the reality is, medical device companies already pay very little in taxes and Obamacare will make up for the tax with an increase in demand. An analysis by Citizens for Tax Justice finds most major medical device companies pay a very low effective tax rate, with firms like Abbot Laboratories making use of some 32 tax havens. Moreover, despite the claims of industry lobbyists, the tax will not hamper American companies because it applies to imported devices as well.
The industry has pushed in every way possible to secure a repeal. In the last election, the AdvaMed PAC contributed spent over $300,000, mostly in support for Republican candidates. Individual companies, including Boston Scientific, Medtronic and CareFusion, have sponsored fundraisers and contributed significant amounts to the campaigns of lawmakers leading the tax repeal effort.
Beyond traditional lobbying and campaign contributions, the industry has used a variety of tactics to influence opinions in Congress. A website called no2point3.com was set up by the industry to encourage medical device companies to collect petitions to Congress to repeal the tax. Earlier this month, AdvaMed began purchasing ads in Politico.
Until he left for another lobbying job in June, Speaker Boehner’s deputy chief of staff was Brett Loper, who had worked as AdvaMed’s chief lobbyist and had orchestrated the initial fight against the device tax.
In fact, medical device lobbyists have been close to Congress all week leading up to the vote today. On Monday through Wednesday, over two thousand medical device executives and industry reps converged on Washington, DC, to discuss their government affairs agenda and meet with lawmakers. On the top of the agenda? Repealing the tax on their industry.
