WASHINGTON — The U.S. House of Representatives passed Minnesota Republican Rep. Erik Paulsen’s bill to repeal a tax on the medical-device industry on Thursday, 270-146.
Passage was expected, given Republican control of the chamber and the 240 co-sponsors who had signed on to repeal. The bill now moves to the Senate, where it faces a much tougher sell among the chamber’s Democrats.
President Barack Obama has also threatened to veto the legislation because of the way Republicans plan to pay for it, by limiting subsidies to low-income and middle-class individuals to purchase health insurance under the president’s health-care-reform package.
The bill is Paulsen’s top legislative priority as he and House Republicans have sought to shield the device industry from the 2.3 percent tax on revenue set to take effect in January. There are some 400 medical-device companies and 35,000 jobs in Minnesota, including industry giants like Medtronic.
Unanimous Minnesota approval
Minnesota’s House delegation voted unanimously to approve the bill. The delegation’s four Republicans had signed on as co-sponsors; Democratic Rep. Collin Peterson has long opposed the health care overhaul; Tim Walz backed the bill after examining the funding offset; and the delegation’s two most liberal members, Keith Ellison and Betty McCollum, voted for the bill as well — though McCollum gave a speech making it clear she joined Democrats in opposing the funding offset.
“I will vote to send this bill to the Senate where I know a responsible offset can be found that will not hurt any citizen,” she said in a floor speech. “I know my two Minnesota senators are committed to repealing this tax and they will work to find an offset that does no harm.”
Democratic Sens. Amy Klobuchar and Al Franken have said they support repealing the device tax, though before Thursday, neither had taken a stance on the Republican payment plan. In a statement during the House debate, Franken reiterated his support for repealing the tax, but said, “It’s clear that we haven’t found the right solution yet — especially given the president’s recent veto threat.”
Klobuchar said she would have voted for the House version of the bill, but noted Obama’s opposition in a statement: “While the administration’s statement that the President will veto this bill means that changes will likely need to be made, I will continue to pursue all options to get this done.”
That veto threat will be a snag for the bill as it heads to the Senate, where Democrats are in the majority and none have signed on to support a Senate version of Paulsen’s bill.
Debate focuses on jobs
Floor debate on the bill centered around well-established arguments for and against the legislation: Republicans said the tax would lead to fewer jobs and less innovation among medical-device manufacturers; Democrats slammed the funding offset and said the device industry was reneging on deals it had made during the crafting of the Affordable Care Act in 2010.
Republicans pitched the bill as a jobs package, citing industry-funded studies that forecast up to 45,000 fewer jobs nationwide after the tax takes effect. Small device manufacturers will be hit especially hard, Paulsen said, because the tax is on a company’s revenue, not profits, hurting the companies with already thin profit margins.
“We are raising the hurdle so high that these small companies will not be able to become the next Medtronic or the next Boston Scientific because it will make it that much harder for them to achieve profitability,” he said at a press conference before the House vote.
Democrats have slammed the Republican plan to pay for the $29 billion plan by limiting the amount of federal money qualified individuals will receive under the health-care law to buy coverage from state-run insurance exchanges. Under current law, people who receive more federal money than they need to buy insurance must refund only a portion of it the government; the Republican plan would require full refunds.
Seen as tax increase
Many Democrats have equated it to a tax increase. Rep. Pete Stark, D-Calif., called the plan “one more piece of Republican legislation that protects special interests at the expense of working class families.”
Citing the offset, the White House threatened to veto the bill on Thursday. A pared-down version of the offset has been signed into law twice, but never a plan as large as the one attached to this bill.
Democrats also argued that the Republican bill allowed device companies to go back on their promise to contribute to the health-care overhaul in 2010. Many cited a letter written by industry leaders to the president during negotiations promising to “work with you to reform the health care system.”
More broadly, they hit Republicans for continuing to push bills meant to cut into Obama’s landmark health care reform overhaul.
“How many bills will we have to go through before you admit that all you’re trying to do is bleed the legislation — that is now law in the United States — so there is not money to fund the mandate?” New Jersey Democrat Bill Pascrell said.
It’s not a sentiment Republicans necessarily disagree with: Speaking at a press conference with Paulsen before the vote, Georgia Republican Rep. Phil Gingrey said, “Every day that we chip away at this legislation is a beautiful day.”
Devin Henry can be reached at email@example.com. Follow him on Twitter: @dhenry