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House presses pause button on medical device tax

The Hill reported late last night that House Speaker Paul Ryan has announced to the House Republican Conference that leaders have reached a year-end deal on taxes and government funding that includes postponement of the "Cadillac tax" and a two-year moratorium on the medical device tax. The 40% levy on gold-plated healthcare benefits packages, dubbed the "Cadillac tax," and the 2.3% medical device excise tax are key elements of the Affordable Care Act (ACA), aka Obamacare.

The Hill reported late last night that House Speaker Paul Ryan has announced to the House Republican Conference that leaders have reached a year-end deal on taxes and government funding that includes postponement of the "Cadillac tax" and a two-year moratorium on the medical device tax. The 40% levy on gold-plated healthcare benefits packages, dubbed the "Cadillac tax," and the 2.3% medical device excise tax are key elements of the Affordable Care Act (ACA), aka Obamacare. The former is designed to reduce overall spending on healthcare, while the device tax is intended to finance healthcare reform. There has been widespread opposition to the Cadillac tax, from employers to unions, while the device tax has been deeply unpopular with the medical technology industry, which has called it a job killer and a drain on R&D resources.

The International Association of Plastics Distribution (IAPD; Overland Park, KS) wasted no time in applauding the suspension of the device tax. "This tax went into effect on January 1, 2013, as part of the Affordable Care Act," wrote the association in a press release distributed this morning. "It is IAPD's hope that Congress will eventually make this suspension permanent, allowing IAPD members and their customers to have the regulatory certainty that will allow this industry to grow and employ more Americans. IAPD is proud to have been an integral player in a coalition with the Medical Device Manufacturers Association in gaining legislative approval for its repeal."

"The performance plastics industry, as well as IAPD, has been lobbying for this action, because we see great opportunity for performance plastics in medical devices," added IAPD President Kevin Short. "IAPD's members make, distribute and fabricate the performance plastics that make . . . life-saving equipment possible. The 2.3% tax was a tremendous burden on our members, and it had a detrimental effect on research and development," said Short.

SPI: The Plastics Industry Trade Association (Washington, DC) was an early proponent of the device tax recall. As reported in PlasticsToday, SPI stated: "Repealing the medical device tax is essential to promoting economic growth, jobs, research and development and manufacturing. More importantly, repealing is critical to ensuring patient access to life-saving care and treatment."

The medical device tax reprieve would save medical technology companies about $3.4 billion, writes Politico, citing statistics from the Congressional Budget Office.

The House is expected to vote on the bill on Friday.

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