Budget debate stirred by a medical device tax which is part of the New Healthcare Law

NBC NEWS

How a medical device tax has stirred the budget debate

John W. Schoen CNBC

• Facebook
• Twitter
• LinkedIn
• GooglePlus
• Email

House Republicans on Monday tried to use a defibrillator to jolt Congress into averting a government shutdown — or at least repeal a tax on the heart-starting device.

Lilly Fowler / Fair Warning

A tax on medical devices is a provision being debated in the fight over the new health care law as a government shutdown looms. Hospitals around the country have spent millions of dollars to buy automated defibrillators such as this device.

A group of diehard opponents of the White House's health care law, set to blow up the federal budget to try to slow or stop the new law, have apparently failed in their bid to float a possible compromise to head off a costly and disruptive government shutdown.
And it's all been about a tax projected to raise annual revenues a tiny fraction of the federal budget.
(Read more: Senate rejects House bill, shutdown looms)
House Republicans have spent months pursuing a series of unsuccessful gambits aimed at thwarting the new law. One proposal survived and landed Monday in the House's last-ditch, take-it-or-leave-it budget proposal — the repeal of a tiny corner of the new law that imposes a 2.3 percent tax on medical devices.
But by midday Monday, the Senate had stripped the provision from the bill aimed at keeping the federal government funded past midnight. House leaders had just hours to approve the "clean bill" — or let the measure die and force the government to begin furloughing workers.
Here's what the tax — and the bid to repeal it — is all about:
House Republicans are just trying to stop Obamacare because it's too expensive. The government's broke. How can we afford it?
The only honest answer is: No one knows what the new health law will cost — or save the government. Much depends on how consumers, hospitals, health care providers, insurers and others respond to the incentives and penalties included in the law.
But the best guess from the Congressional Budget Office in a report requested by House Speaker John Boehner, R-Ohio, is that the law will save the government roughly $109 billion through 2022.
In round numbers, the math goes like this: Expanding coverage will cost about $1.7 trillion over 10 years — including subsidies for low income households, expanded Medicare coverage and tax credits for employers.
That will be offset by $506 billion in penalties from companies and individuals who don't sign up, along with other savings over the same decade. The law will also save the government some $711 billion in overall health care spending, mostly savings on Medicare. And a list of other taxes, fees and revenue raisers will bring in another $569 billion over 10 years, the CBO figures.
One of those revenue raisers is the $29 billion in estimated taxes on medical devices — or about $2.9 billion a year. The 2.3 percent tax, which the government began collecting in January, covers devices like pacemakers and CT scanners. (Consumer devices such as wheelchairs, eyeglasses or hearing aids aren't taxed; equipment sold outside the U.S. is also excluded.).
So why pick on medical devices?

Read More Here

Related articles

• Government Shutdown Looms
• Medical device tax, Obamacare remain linchpins in budget shutdown debate
• Is the medical device excise tax repeal worth government shutdown? Advocate senators torn along party lines
• A simple account of the pending government shutdown