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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.

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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.