US House approves medical care device tax repeal in spending negotiations

As Congress runs out of time to agree on a spending bill to keep the government running, lawmakers are facing a decision on repealing the medical device tax.

Over the weekend, the Republican-run U.S. House voted to delay President Barack Obama's health care law for a year and repeal the medical device tax. The bill would provide funds so federal offices won't close Tuesday morning.

The medical device tax, 2.3 percent on sales, is an issue here in Minnesota, where medical device companies like Medtronic are based. Senate Democrats say they'll strip that provision from the bill. The tax would generate $29 billion in revenue in a decade, according to the Congressional Budget Office.

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The medical device makers say the tax is killing jobs. This has been the key contention from companies that make medical devices, such as hip joint replacements or heart stents, ever since the health-care law passed. One study from industry group AdvaMed concluded that 43,000 jobs would be shipped overseas in response to the fee.

"The tax will stifle innovation and cost thousands of high-paying jobs," one coalition of 400 device manufacturers wrote in a 2011 letter to Congress. "It will increase the effective tax rate for many medical technology companies, thereby reducing financial resources that should be used for R&D, clinical trials and investments in manufacturing."

One such company, Boston Scientific, sent The Daily Circuit the following statement:

"The vote by the U.S. House of Representatives to repeal the medical device tax as part of a continuing resolution to fund the government highlights the significance of this issue for a critical U.S. industry and the patients it serves. Boston Scientific encourages the U.S. Senate to seize this opportunity to remove a $30 billion burden from the medical device industry, helping drive continued research, development, innovation and investment in technologies that save and transform patient lives."