A provision in the proposed American Health Care Act, which would repeal and replace former President Barack Obama’s signature healthcare law, would permanently do away with the medical device tax. Indiana lawmakers have been trying to repeal the 2.3 percent levy for years.
The excise levy was enacted as part of the Affordable Care Act to offset the costs of the healthcare measure. The argument is since medical device manufacturers could benefit from expanded healthcare coverage nationwide, they should help foot some of the bill.
The Congressional Research Service estimates the levy could generate $29 billion in net revenues over the next decade.
The tax is particularly divisive in Indiana, where medical device manufacturing is a multi-billion dollar industry.
Executive Director of the Indiana Medical Device Manufacturers Council Kathy Heuer says the repeal would have a huge impact on the Hoosier state.
“Every dime that we pay over and above what we already do in taxes towards this medical device excise tax is another dollar taken away from either research and development or hiring new employees, expansion of plants,” she says.
Congress passed a two-year suspension of the medical device tax in 2015, but the AHCA language would make the repeal permanent.
The AHCA passed the House last week, but extensive changes are expected in the Senate before a vote.
Democratic Sen. Joe Donnelly and Republican Sen. Todd Young have both voiced support for a medical device tax repeal. However, Donnelly says he will not vote in favor of the overall repeal and replace measure.
Barbara Brosher contributed to this report.