Wednesday, June 9, 2010

Roberts Amendment (#4325) on Exempting Pediatric Devices from Device Tax

Senator Roberts has offered an amendment (#4325) exempting pediatric devices from the health law’s medical device tax.  A vote on this amendment may occur later today as a side-by-side to the Cardin amendment (#4304) regarding FEHBP coverage for dependents under age 26.
Summary:
  • The health care reconciliation bill imposed a 2.3 percent tax on medical device sales, raising $20 billion over 10 years.
  • Eyeglasses, contacts, hearing aids, and “generally purchased” goods are exempt from the tax. However, a long list of commonly used goods such as those classified as Class I, and basic medical devices such as wheelchairs, stethoscopes, and hospital beds are not exempt.
  • The Roberts amendment would exempt “medical devices primarily designed to be used by or for pediatric patients” from the new medical device tax.
  • The amendment is paid for by lowering the affordability exemption in the individual mandate from 8 percent of income to 5 percent.  The affordability exemption creates a threshold so that people who do not have access to affordable health insurance (that costs less than the threshold) do not have to pay the individual mandate penalty.  In the underlying bill this threshold is 8 percent of income; this revenue raiser lowers the threshold to 5 percent of income so more people have to pay.  This provision was accepted by members on both sides during the Senate Finance Committee mark-up.
Arguments in Favor:
  • This tax will drive up the cost of nearly all medical devices, including wheelchairs, surgical masks, stethoscopes, gloves, IV, blood pressure monitors, scissors, needles, cribs, trays, lights, stents, pacemakers, scales, scalpels, inhalers, all manner of prosthesis, and ankle, knee, and hip braces.
  • A tax on these basic instruments of medicine will raise costs for everyone who receives health care.
  • JCT and CBO have told us that these taxes will be passed along to consumers in the form of higher prices and will make medical care less affordable and less accessible.