Baucus on fee for medical-device industry: ‘No group should be exempt’ from paying for health-care reform

U.S. Senate Finance Committee Chairman Max Baucus said Monday that although senators are still negotiating on whether a controversial fee on medical-device makers will be in the final version of health-care reform, he thinks the industry should pay its fair share. His view differs from that of Minnesota’s two senators and Gov. Tim Pawlenty.

The proposed $4 billion annual fee (about 3 percent of annual revenue) in the Senate Finance Committee’s bill riled Minnesota’s medical-device industry and prompted Sen. Amy Klobuchar, D-Minn., to co-author two letters to Senate leadership. “A tax of such magnitude will threaten the existence of some manufacturers, would likely lead to significant job reductions by others, and will certainly curtail investment in innovation,” according to the letter, which also was signed by Sen. Al Franken, D-Minn., and 12 other senators, including Sen. John Kerry of Massachusetts.

Baucus, co-author of the Finance Committee’s America’s Healthy Future Act of 2009, spoke to reporters during a teleconference call sponsored by Families USA, a consumer health-care advocacy group.

“This is in negotiations right now … and frankly the device manufacturers are divided,” said Baucus, D-Mont.

Among the device makers lobbying against the fee are Medtronic and St. Jude Medical, which have their headquarters in the Twin Cities, and Boston Scientific, which has plants here for heart stents and other cardiac devices.

“This all comes down to shared responsibility,” Baucus said Monday. “We’re all in this together as Americans — and that means individuals, that means companies and providers, and that means hospitals, the insurance industry, the pharmaceutical industry and the medical-device manufacturers. No group should be exempt, and at the same time shared responsibility means that each contributes fairly.”

According to a story in Sunday’s Washington Post, Democrats on the Finance Committee became angry when the $130 billion-a-year medical-device industry “refused to offer direct financial concessions earlier this year to help pay for health-care reform, unlike drugmakers, hospitals and other health-care players.”

Baucus told reporters during today’s teleconference that his committee “spent a lot of time hiring Wall Street analysts to look at the state of these various sectors … and their projections and we’re trying to come up with numbers that are fair across the board to every industry … and we’re going to keep that principle as we work with device manufacturers.”

According to the Post, Democrats on the committee “view the [device] industry as a key contributor to soaring health-care costs. … Backers of the levy note that profit margins top 20 percent for many popular medical devices and that spending on such technology is far higher in the United States than in other countries with better health outcomes.”

Klobuchar tells the Post: “The issue here is that these are very good jobs in our state and in our country. You want to be very careful when you start assessing taxes on an industry like this.”

Minnesota Gov. Tim Pawlenty, a Republican, also asked Klobuchar and Franken to oppose the fee, and the Post makes note of the unusual political alignment.

Since his America’s Healthy Future Act passed out of the Finance Committee last week, Baucus has been meeting with Senate authors of the Affordable Health Choices Act. A side-by-side comparison of the major reform bills can be found here [pdf].

As for negotiations on the the medical-device fee: “We’re getting close; we’re getting closer — we’re just trying to do something that’s fair,” Baucus said.

You can also learn about all our free newsletter options.

Comments (6)

  1. Submitted by Thomas Swift on 10/19/2009 - 07:48 pm.


    I could have sworn that Obama & the Democrat Congress were telling everyone this summer that ObamaCare would be paid for by reigning in waste and fraud from MediCare.

    Excuse me while I check….

    Let’s see. Oh, here’s where he wanted to raise Medicare taxes

    “President Obama will ask wealthy Americans to deal with a tax increase and pay higher Medicare premiums to help fund a $634 billion health care “reserve fund” aimed at reforming the system”

    …but that’s not what I’m looking for.

    Ahh, here it is:

    “In their quest to enact health care reform legislation, Democrats’ major challenge is securing the money to pay for greatly expanded insurance coverage and more government regulation in the face of strong Republican opposition and an unsettled private sector.”

    “As the administration and its congressional allies pursue revenue sources to pay the estimated costs of near-universal coverage ($1.2 trillion over a decade), one potential source that Obama has emphasized is an acceleration of government efforts to pursue waste, fraud, and abuse that sap the health care system of billions of dollars every year.”

    Hopey/Changey embodied at last!

    But…now they’re scuttling up everyones pants legs looking to include everyone to set their table?

    What gives?

  2. Submitted by Tom Anderson on 10/19/2009 - 08:28 pm.

    As long as no group is excluded (including those making less than $250,000 per year or anyone insured by the “public option”). Sadly, our Senators have no pull so our businesses will be taxed and pass on the cost to the consumers. Don’t look for any more fairness in Medicare payments either in spite of our Senator’s objections. In a cruel twist, had the 60th Senator been Coleman instead of Franken, Minnesota might be receiving the “Olympia Snowe treatment” and securing all kinds of concessions.

  3. Submitted by Terry Burke on 10/20/2009 - 12:15 pm.

    Klobuchar has been sitting on the sidelines on the public option debate. While the insurance companies are waging a no-holds barred campaign to defeat the public option, Klobuchar is simply waiting to see what the final bill will be, recognizing that the insurance companies will make billions in new profits if there isn’t a public option. She’s guaranteeing that her campaign contributions from insurance companies will be generous for years to come!

  4. Submitted by Rebecca Hoover on 10/20/2009 - 12:29 pm.

    I am afraid I have to agree that Amy Klobuchar is in the pockets of big insurance corporations and executives. Her failure to support the public option may even mean a public option is not part of the final bill that comes out of Congress. I also agree that the insurance corporations and executives will be generous to Amy for years to come. Perhaps she’s eyeing a job as an insurance executive. In the meantime, almost everyone I know is hoping Amy becomes a one term senator and that she and her mean looking black suits and pants disappear from the radar soon. I can’t help but note that a psychologist might have something to say about Amy’s frequent choice of the color black. Yikes! She looks more like an executioner or mortician at times than a leader who can inspire hope and dreams.

  5. Submitted by Bernice Vetsch on 10/20/2009 - 02:39 pm.

    Thomas: The Medicare spending to be trimmed is the excessive payments in tax dollars to rivate fee for ervice insurers so they can give seniors such extras as gym memberships. Meanwhile, regular Medicare reimbursements to providers are way below what many doctors and clinics need in order to keep their offices open.

    The private fee for service idea was another right-wing privatization effort by those who want to kill Medicare and Social Security so people would be at the mercy of the insurance industry (and its record of abuse of its customers) and of the stock market — which could give you a good retirement income UNLESS you happened to retire in the same year as a market crash, in which case you might have nothing.

    These and the privatized Medicare drug benefit are all bad ideas that benefit corporate America at the expense of Americans. The drug benefit, for instance, costs $80 billion more per year (including taxpayer dollars and excess senior premium costs, co-pays, deductibles and donut hole purchases) than it would were it a simple Medicare benefit like everything else.

  6. Submitted by Paul Scott on 10/21/2009 - 08:51 am.

    Ummm, getting back to the subject of the special tax on device makers…I thought the WaPo story was really the first time I saw a reporter go to the trouble of getting the reasoning for this tax, and demonstrated what local press is afraid to do — say that perhaps device makers are due to be assessed their fair share.

    Before Klobuchar and Fanken and Paulsen run out and do the bidding of Medtronic and others pleading poverty, perhaps they could ask why these companies spend so much paying their CEOs, or paying all that money to researchers like the U of M’s David Polley and Timothy Kukklo, the military researcher in Kansas who was paid to write a study that supported a bone product, yet with apparently falsified signatures.

    We are all for keeping local jobs, but we have been told for too long that big drug and device companies spend every last cent on research of lifesaving new products. More often then not their funds are spent on marketing new products, and creating new markets for them and hence, new healthcare costs for you and I.

Leave a Reply