On January 6, Representative Erik Paulsen (R-MN) introduced the latest bill to repeal the 2.3% excise tax on medical devices imposed by the Affordable Care Act, commonly referred to as “ObamaCare.”  Legislators have introduced similar legislation each year since the tax was passed in 2010.  The current bill (H.R. 160) has over 250 cosponsors, including 26 Democrats, and would apply retroactively to sales made after December 31, 2012.

As we previously reported, the repeal of the tax played a prominent role in negotiations over the government shutdown in October 2013.  Although this prior effort had bipartisan support as well, the final compromise to end the government shutdown did not include a repeal.  Proponents have argued that the tax is justified because the Affordable Care Act benefits the medical device industry by expanding the pool of insured patients that will utilize medical devices.

Representative Paulsen’s latest effort seeks to capitalize on Republican victories in the House and the change of control in the Senate.  Further, momentum to repeal the tax has increased since November 2014, when the Congressional Research Service issued a report finding that, among other things, the tax imposed “administrative and compliance costs that may be disproportionate to revenue” and that under traditional economic and tax theory, “the tax is challenging to justify.”

One hurdle in repealing the tax is finding offsets to generate revenue—which is where past efforts stalled.  However, different members of Congress have expressed divergent views on whether finding such offsets represent a significant roadblock to repeal.  The tax is estimated to raise net revenues of $29 billion to fund the Affordable Care Act.

We will continue to post updates on efforts to repeal the device tax.