Democrats May Resurrect Key Portion of GOP’s “Skinny Repeal”
One of the three provisions in the “skinny repeal” of Obamacare that Senate Republicans reportedly are pushing actually enjoys broad support among congressional Democrats, especially among some who receive outsize amounts of cash from the medical-device industry, according to an analysis conducted for TYT Politics by the non-profit group MapLight.
The skinny repeal reportedly would end Obamacare’s penalties for individuals who forgo insurance and for some companies that don’t offer it, and also permanently repeal Obamacare’s 2.3 percent tax on medical devices. The tax was suspended, with bipartisan support, for two years but will resume in January unless it is permanently repealed.
Even if the GOP skinny repeal fails, leading congressional Democrats apparently are prepared to repeal the medical-device tax if it can be done through other, less controversial legislation. Some Democrats — especially from states with big med tech companies — opposed the tax from the start, and have consistently joined Republicans in seeking its demise.
Opposition to the tax is based on industry claims that it killed jobs and stalled spending on research and development. Analysts, however, have found that the industry continued to expand. As TYT Politics reported last month, big med tech companies continued to grow and spend more on R&D while the tax was in effect.
TYT Politics also reported that if the industry sees a windfall from suspension or repeal of the tax, companies may use it to fund the steep, one-time severance costs associated with layoffs and to invest in moving manufacturing overseas. Nevertheless, many prominent Democrats, including several leading progressives, continue to oppose the tax as a job killer.
In an interview this May, the president of the industry trade group AdvaMed, Scott Whitaker, said that repeal has bipartisan support in both chambers and that his group has been communicating with congressional leadership to ensure that repeal will be attached to some bipartisan bill this year. “I’ve been told by everybody, including leadership in the House and the Senate, one way or the other we’ll get it done this year,” Whitaker said.
“Every independent analysis has found that the economic impact of the device tax on the industry is too small to notice. The tax doesn’t shift employment offshore, and it has minimal effect on innovation,” said Paul Van de Water, senior fellow at the non-partisan research group the Center on Budget and Policy Priorities.
In an emailed statement to TYT Politics, Van de Water said, “Repealing the medical device tax is Robin Hood in reverse. Repeal would cost $19.6 billion through 2026 and would disproportionately benefit a few large, highly profitable device manufacturers.”
Asked why Democrats will try to repeal it, Van de Water said, “When industry executives and lobbyists assert that the device tax is costing jobs, no matter how weak the economic evidence, it’s hard for a politician to oppose repeal. Campaign contributions may also play a part.”
The campaign-donation analysis provided to TYT Politics by MapLight shows that the med-tech industry — including political action committees and individual employees — gives as much as double the money to its top supporters as it does to other members of Congress. In 2015, for instance, the 41 senators who sponsored the Medical Device Access and Innovation Protection Act — repealing the tax — received industry donations averaging $52,106 between 2010 and 2016, while non-sponsors averaged $30,904.
That bill never came up for a vote. In the House, however, members who voted to repeal the tax, including 46 Democrats, received an average of $7,500 during that congressional term, compared to just $3,200 for those who voted no.
The sponsors of the two bills — Sen. Orrin Hatch (S-UT) and Rep. Erik Paulsen (R-MN) — were also the industry’s top recipients of political donations.
Democratic Senator Amy Klobuchar of Minnesota, home to many big med tech companies, is the second-biggest beneficiary in the Senate. Even progressive Democratic leaders such as fellow Minnesotan Sen. Al Franken and Sen. Elizabeth Warren (D-MA) have fought the tax and taken industry money.
The Intercept reported that an internal Democratic Congressional Campaign Committee memo indicated that lobbyists from GE — a massive producer of medical devices — pushed for repeal of the tax during a DCCC meeting apparently held in the spring of 2015. In a letter dated May 1 of that year, 18 House Democrats publicly urged congressional leadership for a vote to repeal the tax. The repeal passed on June 18.
According to data from MapLight, GE’s political action committee — and top executives including then-CEO Jeff Immelt — gave thousands of dollars to those 18 House Democrats around that time.
Most of the Democrats contacted by TYT Politics regarding their support for repeal did not respond. Franken Deputy Press Secretary Andy Osborne emailed a statement suggesting that killing the tax may not be a top priority at the moment. The statement said, “Sen. Franken supports ending the medical device tax and making up for the lost revenue by finding a better way to pay for affordable health care. But right now, he is focused on doing everything he can to stop the Republican health plan being crafted behind closed doors in the Senate, which would gut Medicaid and cruelly rip health coverage from millions of Americans.”
Warren, too, has suggested that Congress should not repeal the tax without replacing its revenues. A spokesperson for Sen. Minority Leader Chuck Schumer (D-NY), who also supports repeal of the tax, told TYT Politics that although the GOP has yet to reveal the details of the skinny repeal proposal, Schumer opposes it based on what his office has heard about it.
Regarding how to pass repeal outside of a GOP health-care bill, Democrats appear split on how far they’re willing to go.
AdvaMed wants to add repeal to an upcoming bill on fees that device makers pay to the Food and Drug Administration, but a Franken spokesperson said over the weekend he has no plans to offer such an amendment. A Klobuchar spokesperson said she remains committed to pursuing repeal in legislation but that it’s “unclear” whether this can be done in the FDA bill.
It’s also unclear whether anyone in either party will defend the tax if its repeal is attached to new legislation in the coming months. “Tax cuts are always popular,” Van de Water said, “so the fiscally responsible position is often a lonely one.”
