Tuesday, September 24, 2013

Will the ACA's medical device tax be repealed?

Today I explore a different aspect of yesterday's topic of the Affordable Care Act's Medical Device Tax. It's more political science (the factors that influence public policy making) than public policy (how effective actual policy ideas are).

The original perspectives piece on the tax in the New England Journal of Medicine by Daniel Kramer and Aaron Kesselheim report that the U.S. Senate voted 79-20 to repeal the tax as part of its non-binding budget resolution that passed last March. The authors then note that the repeal vote was bipartisan, overwhelming, and came after an intense lobbying campaign by the medical device industry. Based on this vote, they suggest that the tax is in imminent danger of repeal.

I think this fear of repeal likely overblown for now because talk is cheap and there were too many possible factors that into each Senator's vote to repeal to figure out if a majority of Senators would have actually voted to repeal the tax if push came to shove (the fancy social science term is to say the result was overdetermined)



First talk is cheap. This budget resolution is non-binding, which meant that it did not have the force of law. Senators had an opportunity to express support for the medical device industry -- and all the jobs it creates in their home states -- via a mechanism that had no chance of becoming law. In exchange, they could probably count on some campaign donations. The action of voting for repeal was completely symbolic with no policy ramifications, unlike a real repeal vote. An analogy would be the difference between a legislator sending out a generic press release in favor of Earth Day and doing the heavy lifting on a bill that regulated greenhouse gas emissions.

Just because talk is cheap doesn't mean that a real repeal would get through the Senate. Some Senators who voted to repeal -- for example Amy Klobucher (D-Minn) whose home state is loaded with medical device manufacturers and worked hard to weaken the tax during the original health reform debate--  undoubtedly were sincere in their vote. But many others might simply want to reform the tax slightly. Or they might be unsure about the tax. Or they might have other issues to prioritize on a complicated budget bill in exchange for which they would tolerate the continued existence of a tax. Or they might even be for the tax, but see no point in picking a fight with the medical device lobby on a symbolic piece of legislation. That  79-20 bipartisan vote might conceal all of these motives.

Finally, keep in mind that any repeal would have to get through the House, and be signed by the President -- and I seriously doubt that Obama would agree repeal the device tax without some sort of replacement.

All these uncertainties and institutional hurdles add up to the strong likelihood that the device tax is around for at least the next three years.

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