18 Democratic senators revolt against Harry Reid on Obamacare tax
Eighteen Democratic U.S. Senators and senators-elect sent a letter to Senate Majority Leader Harry Reid last week calling for a “delay in the implementation” of the medical device tax in Obamacare, the Wall Street Journal reports.
The provision was an integral part of the version of the Obamacare law, which was passed in the Senate under Reid’s stewardship in 2009. It is set to take effect on January 1, 2013.
An effort to repeal the provision failed in Congress in June. At the time, Reid characterized the proposed repeal as a Republican attack on Obamacare.
“The medical technology industry directly employs over 400,000 people in the United States and is responsible for a total of two million high-skilled manufacturing jobs. … With this year quickly drawing to a close, the medical device industry has received little guidance about how to comply with the tax — causing significant uncertainty and confusion for businesses,” according to the letter. “We urge you to support delaying enactment of this provision in a fiscally responsible manner.”
The provision’s 2.3 percent excise tax on medical device manufacturers has sparked panic within the medical devices industry. Indiana-based Zimmer Holdings, which manufactures hip replacement implants, laid off 450 workers in anticipation of $60 million in taxes in 2013. Michigan-based Stryker Corp., which also produces hip implants, laid off 5 percent of its workers in a bid to compensate for the $100 million it will pay in taxes next year.
The provision has proved to be problematic for Democratic senators from states with large numbers of medical device companies. Indiana Senator-elect Joe Donnelly and Michigan Senator Debbie Stabenow signed the letter alongside the next Massachusetts Senate delegation, Elizabeth Warren and John Kerry, whose state is home to more than 400 medical device companies.
Democrats sent their letter to Reid less than three weeks after dozens of medical device industry executives “swarmed” Capitol Hill in a lobbying push that resulted in more than 60 different meetings with legislators. The trade groups Advanced Medical Technology Association, Medical Imaging and Technology Alliance, and Medical Device Manufacturers Association led the lobbying effort to delay the provision.
The medical device industry has a powerful lobby in Washington. In the third quarter of 2011, when medical device manufacturers began their big-money push to stop the medical device tax, the industry spent more than $32 million lobbying Congress. Prominent political donor General Electric spent $5.7 million that quarter to lead all medical device lobbyists.