Senate Democrats are getting cold feet about full implementation of the Affordable Care Act despite unanimously voting to pass the bill in 2009.
Sixteen Democratic Senators signed onto a letter to Senate Majority Leader Harry Reid calling for postponement of the medical device excise tax, which is part of the Affordable Care Act. The tax is scheduled to take effect on Jan. 1, 2013.
The letter argues that the medical device industry has not received guidance about how to comply with the tax and that this is causing “significant uncertainty and confusion for businesses.” It stresses that the economy is in too delicate a situation to impose additional burdens on such an important sector.
“The medical technology industry directly employs over 400,000 people in the United States and is responsible for a total of two million high-skilled manufacturing jobs,” they write. “As we work together to develop a long-term solution to help move our economy forward, reduce our debt, and reform our tax code, we urge you to support delaying enactment of this provision in a fiscally responsible manner.”
Sens. Al Franken (D., Minn.) and Kay Hagan (D., N.C.), who also voted for the tax, are among the Senate Democrats pushing for full repeal. Franken argued in Minnesota’s Star-Tribune that the details of the tax are reaching the industry “unconscionably late.”
Franken and Hagan are facing potentially tough reelection fights in 2014. St. Jude Medical, the multi-billion dollar medical device developer headquartered in Minnesota, has already contributed at least $7,000 to Franken’s 2014 campaign.
St. Jude Medical is not the only important company in the medical device industry for Democrats. Jon Stryker, who gave $2 million to the pro-Obama Super PAC Priorities USA, is the heir to Stryker Corporation, one of the country’s largest medical supply companies.
Styrker is cutting 1,170 jobs in anticipation of the looming medical device excise tax. Stryker announced plans to close down two New York plants by the end of the year in an effort to face the new realities of the industry in 2013.
It would not be the first time the Stryker family received preferential treatment from the left. Democracy Alliance member Pat Stryker, Jon’s sister, used her clout as a major Colorado fundraiser to get a $400 million loan guarantee for Abound Solar, a green energy firm in which she was a principal investor.
The medical device excise tax has already been a target for Republican lawmakers who are calling for its full repeal. House Majority Leader Eric Cantor (R., Va.) has pushed for the tax to be part of the fiscal cliff deal.
Additionally, 800 companies and medical groups, including St. Jude Medical, sent a letter last month to Senate leadership calling for a full repeal of the tax. The letter states that the $30 billion excise tax will increase health care costs across the county, stifle innovation, and eliminate thousands of high-paying jobs.
“Unfortunately, beginning in 2013, the health care law will impose over $30 billion in new excise taxes on medical technology companies that will stifle innovation and U.S. competitiveness,” it warns. “If this tax is not repealed, it will continue to force affected companies to consider cutting manufacturing operations, research and development, and employment levels to recoup the lost earnings due to the tax.”