When it comes to healthcare reform, the medical technology industry almost uniformly agrees that the medical device tax, which is part of the Affordable Care Act, or Obamacare, must go. Then it starts to get, well, complicated.
The 2.3% excise tax was suspended by Congress in 2015 and, unless it is repealed, will go back into force at the end of this year. It has been decried by industry associations and lobbying groups as a job killer and impediment to innovation.
While the medical device industry has been very vocal in pushing for repeal of the tax, it has been largely silent on other aspects of the American Health Care Act, which was passed in the House, and the revised legislation, the Better Care Reconciliation Act, that is currently mired in the Senate. As Amanda Pedersen notes in the Medtech Pulse blog, hosted by sister brand MPMN, support for a repeal of the device tax by medtech industry association AdvaMed is “about as close as any industry group has come to voicing an opinion on either bill.” One reason, perhaps, is that the “GOP’s most recent attempt at healthcare reform is not in the best interest of patients,” adds Pedersen.
Whether one feels that access to affordable healthcare is a legitimate government responsibility or should be left to the free market, the medical device industry, like any business, is attuned to the needs of its customers. At one level, these are hospital purchasing organizations and medical practitioners, but patients also factor in eventually. If you stand to lose millions of customers because they can no longer afford health insurance, that’s a problem. In most boardrooms, reality always trumps ideology.
And then there is the ongoing uncertainty of what our healthcare system is going to look like after this is all over, and that is bound to rattle industry. Will there be a replacement to Obamacare or will it simply be repealed and replaced at a later date? And if it's the latter, what will be done about the “disaster,” to quote President Trump, that is Obamacare in the meantime? More than a few medtech execs are reaching for the Xanax as I write this.
As Steve Brozak wrote in Forbes on June 22, just after Senate Republicans unveiled the draft healthcare bill, “Wall Street detests uncertainty, and even though it seems like the Street hasn’t been paying too much attention to Congress, it knows that the healthcare bill represents an uncertain change from the status quo. It may be a long, hot summer for healthcare reform.”