Many Medical Devices Still Taxed Under Baucus Health Bill

A provision in the Democrats’ proposal to partially fund health care reform would tax medical devices and replacement parts like pacemakers, hearing aids and porcelain teeth, worrying critics who say the higher costs will be passed on to consumers.

By Maxim Lott
Friday, October 02, 2009

Tucked into the Democrats’ proposal to partially fund health care reform is a provision to tax medical appliances — including some manufactured replacement parts for your body.

Under pressure, the Senate recently exempted medical items that cost under $100 — such as tampons and condoms. But the tax, expected to raise about $40 billion over the next decade, is still in the bill and includes items like:

Hip joint replacements
Gastrointestinal tubes
Artificial hearts
Hearing aids
Porcelain teeth
Heart defibrillators
Prosthetic heart valve rotators
Powered wheelchairs

Groups like the Medical Device Manufacturer’s Association said that the tax would hurt them, as well as those who need medical devices.

“Virtually all medical device providers would be affected,” Thomas Novelli, the director of federal affairs at the Medical Device Manufacturer’s Association, told “Ultimately, the costs associated with this tax are going to be passed on to consumers [because] producers will have to raise prices on their products.”

Dr. Jennifer Mellor, the director of the Schroeder Center for Healthcare Policy at the College of William and Mary, agreed that part of the tax would be passed on to consumers. But she said that it was probably in the bill because universal health care is expected to help medical device makers by making all Americans buy insurance.

“When people have insurance, they use more medical care. It could be that [legislators] say that if you’re going to provide a whole new set of customers, and these [medical device] firms are going to get some benefit from that, it might make sense that they also share in the burden of paying for these new benefits.”

Novelli said that many of the items being taxed were used almost exclusively by the elderly, who are all already covered under Medicare.

“If you look at the devices that are primarily going to be targeted, like pacemakers, etc., they are already covered under Medicare. So that argument doesn’t hold water.”

The measure is facing significant bipartisan opposition in Congress, and members of both parties have pushed back against the measure drafted by Sen. Max Baucus, chairman of the Senate Finance Committee.

Sen. Al Franken, D-Minn., wrote in a letter to Baucus that the tax “will seriously threaten thousands of American jobs and deter innovation.” There are “many other ways to save money in health care,” he said.

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