U.S. House votes to kill Obama's medical device tax

WASHINGTON Fri Jun 8, 2012 4:56am IST

U.S. President Barack Obama speaks about college affordability while on the University of Nevada Las Vegas campus in Las Vegas, June 7, 2012. REUTERS/Larry Downing

U.S. President Barack Obama speaks about college affordability while on the University of Nevada Las Vegas campus in Las Vegas, June 7, 2012.

Credit: Reuters/Larry Downing

Related Topics

Stocks

   

WASHINGTON (Reuters) - The Republican-led U.S. House of Representatives voted on Thursday to strike down a 2.3 percent tax on medical devices and other parts of President Barack Obama's healthcare law, although the effort is likely to hit a wall in the Democratic-led Senate.

More than three dozen Democrats sided with Republicans to repeal the provisions, including the tax that the medical device industry has fiercely opposed. T he vote was 270-146.

The Obama administration has said it would veto the bill, arguing the device industry will benefit from the 2010 healthcare law as a whole, which aims to add tens of millions of Americans to the health insurance rolls.

Democrats said the industry did not fight the tax when the 2010 law was being crafted because manufacturers knew their sales would rise with more people getting insurance coverage.

"This is a PR (public relations) stunt for the election. The Republicans are helping the device industry back out of a deal they made," Democratic Representative Jim McDermott said.

Republicans cited industry-funded studies that concluded the new medical device tax would lead to lost jobs. Medical device makers have been lobbying for repeal of the tax.

"This tax will increase the effective tax rate for many medical technology companies, threatening higher costs, job loss and reduced investment here at home," Republican Dave Camp said.

The 2.3 percent excise tax, to take effect in 2013, applies to the sale of medical devices by manufacturers and importers.

Although the bill is unlikely to pass the Senate, healthcare investors are watching the device tax repeal votes, said Ipsita Smolinski, who watches Washington for investors for the firm Capitol Street.

"Not because they think the bill can pass the Senate, but because they are keeping a running list of provisions that could be repealed if the healthcare reform law is slowly dismantled post-election," Smolinski said. Presumptive Republican presidential nominee Mitt Romney has vowed to repeal Obama's healthcare law if he wins November's election.

The fight could become moot depending on the outcome of a Supreme Court ruling expected in late June on the law's constitutionality. The court could overturn the entire reform package or eliminate selected provisions, including a mandate that requires individuals to have health insurance.

The House legislation also repeals a part of the healthcare law preventing consumers from buying over-the-counter products with funds from specialized health savings accounts.

Among the backers of repealing the devices tax are lawmakers from states with big medical device companies, including Massachusetts, Minnesota, Pennsylvania and Michigan.

There is also support to repeal the tax among some Senate Democrats, but not in the form the House bill takes. The fate of that effort was unclear.

Minnesota-based Medtronic (MDT.N) and Massachusetts-based Boston Scientific (BSX.N) are two of the biggest medical device companies in the United States.

(Additional reporting by Donna Smith and Patrick Temple-West; Reporting by Kim Dixon; Editing by Kevin Drawbaugh and Peter Cooney)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage