Bill to kill med device tax sails to House victory. Now what?

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To nobody’s surprise, the U.S. House of Representatives has passed Minnesota Republican Erik Paulsen’s bill to repeal the 2.3 percent excise tax on medical devices set to kick in next January as part of the Patient Protection and Affordable Care Act.

The Protect Medical Innovation Act of 2011 breezed through on a 270-146 vote Thursday afternoon, according to numerous sources.

The margin was broadened by support from 37 House Democrats representing states in which medical-device manufacturing is crucial to the local economy, including Minnesota, New York and California, according to The Hill.

Reports also pointed out that, despite its decisiveness, the vote fell 18 hands short of the 288 needed to override a veto with a two-thirds majority.

That matters, as the vote came the day after the White House’s Office of Management and Budget (OMB) released a statement threatening a veto from President Barack Obama.

Meanwhile, numerous pundits predicted that the President’s veto warning would be enough to keep the Democrat-controlled Senate from even voting on its version of the legislation. Not a single Democratic senator has gotten behind the measure, and several made statements to the media Thursday confirming their resolve to preserve the tax.

Awareness of the dual hurdles—a White House and Senate strongly opposed to repeal—didn’t stop Stephen J. Ubl, president of industry lobby AdvaMed, from celebrating the moment.

“On behalf of the nearly two million men and women whose jobs are supported by the medical technology industry, we would like to thank Rep. Erik Paulsen, the author of the bill that passed today, for his tireless leadership in seeking repeal of this onerous tax, as well as all the other members of the House who supported the legislation,” said Ubl in remarks posted on the group’s website. “Medical technology companies are world leaders in the development of new medical devices and diagnostics for patients worldwide. AdvaMed encourages the U.S. Senate to join the House and act promptly to repeal this counterproductive, job-destroying tax.”

For its part, the OMB said it opposes repeal of the device tax mainly on the basis of the costs it believes would shift from industry to taxpaying households.

“This tax break, as well as other provisions in the legislation relating to tax-favored health spending arrangements, would be funded by increased repayments of the Affordable Care Act’s advance premium tax credits, which would raise taxes on middle-class and low-income families, in many cases totaling thousands of dollars, notwithstanding that they followed the rules,” stated OMB.

The office also reiterated its claim that the medical device industry stands to benefit from “an additional 30 million potential consumers who will gain health coverage under the Affordable Care Act starting in 2014. This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion.”

The chance exists that none of this will matter by late June, when the Supreme Court will rule on the very constitutionality of the healthcare reform law. Will the court overturn healthcare reform as a whole or call foul on only certain provisions, such as the individual mandate requiring uncovered citizens to obtain health insurance? Stay tuned.