Non-Binding Resolution May Signal First Step in Repeal of Medical Device Tax

A mere few weeks after its launch, and the Delaware Healthcare Industry Blog is setting the national agenda on Affordable Care Act implementation!

As we bemoaned in a prior blog post, the gradual roll-out of widespread health care reform under the 2010 Patient Protection and Affordable Care Act (the “Affordable Care Act”) saw several new tax increases and other revenue-generating mechanisms come into law in 2013, including a new medical device excise tax. The 2.3 percent excise tax is now assessed on the sales price of most medical devices when purchased from a manufacturer, producer, or importer.

Although the medical device tax remains law, the U.S. Senate took steps on March 21st that demonstrate widespread bipartisan opposition to the new tax:

“The Senate voted 79-20 to call for repeal of the tax, but the resolution is non-binding and will not change the levy. The symbolic measure will be attached to a non-binding budget measure drafted by Senate Democrats that is expected to pass on Friday.

Full repeal of the tax may be difficult to achieve, given its $30 billion price tag and the opposition of key Senate Democrats, including Majority Leader Harry Reid.”

Naysayers may point out “nonbinding resolution” is not normally the mark of a D.C. power player (or that “the opposition of key Senate Democrats” includes both of the gentlemen sent to Washington by the Diamond State).  Minnesota’s Al Franken – one of the 33 Democratic Senators who joined with all of their Republican colleagues in last month’s purely symbolic vote – is suggesting that more formal legislation may follow.  Sen. Franken has good reason for optimism; as the Wall Street Journal points out, the House of Representatives came close to a veto-proof vote on its own anti-medical device tax bill last June.  Watch here for further developments!

Author:  James J. Gallagher, Esquire is a member of the Tax, Estates and Business Practice at Morris James LLP.