California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

House To Vote on Bill To Repeal Health Reform’s Tax on Medical Devices

On Thursday, the House will vote on legislation (HR 436) that would repeal a 2.3% excise tax on medical devices created to help fund the federal health reform law, the Washington Times reports (Winfield Cunningham, Washington Times, 6/6).

About the Legislation

The package includes two other GOP proposals, including legislation (HR 5842) that would eliminate restrictions on consumers' ability to use tax-preferred savings accounts to pay for the cost of over-the-counter drugs and a bill (HR 1004) that would allow individuals with pre-tax flexible spending arrangements to keep up to $500 in unused funds (California Healthline, 6/4).

The Congressional Budget Office estimated that repealing the device tax, which would go into effect next year, would decrease federal revenue by $29.1 billion over a decade. The over-the-counter drug bill and the FSA measure also would reduce revenue by about $4 billion and $4.1 billion, respectively (Attias, CQ HealthBeat, 6/6).

The legislation would offset those revenue losses by addressing overpayments in subsidies to help U.S. residents purchase health coverage. The health reform law established subsidies to lower-income U.S. residents, basing the support on their annual income. As a result, an individual whose income increases mid-year could receive thousands of dollars in subsidies for which they are not eligible (Washington Times, 6/6). The provision would make U.S. residents liable for those overpayments. Current law caps the amount individuals with household incomes of under 400% of the federal poverty level must return. The Congressional Budget Office has estimated the provision would generate $43.9 billion over 10 years.

Portions of the overpayments have been used to offset the cost of previous legislation eliminating the 1099 tax-reporting requirement in the overhaul and 2010 legislation that prevented a cut to Medicare physician reimbursement rates (CQ HealthBeat, 6/6).

However, some Democrats are concerned that the newest plan could deter some U.S. residents from seeking out the subsidies. According to the Joint Committee on Taxation, the bill could dissuade 350,000 U.S. residents from purchasing coverage (Washington Times, 6/6).

White House Issues Veto Threat

On Wednesday, White House officials announced that President Obama would veto the measure if it reaches his desk, The Hill's "Healthwatch" reports. The officials said the legislation "would fund tax breaks for industry by raising taxes on middle-class and low-income families" and increase the number of uninsured U.S. residents.

Republicans have said the measure would help lower health care costs by eliminating an extra expense for medical device makers.

However, administration officials in a statement of administration policy argued that the industry would "benefit from an additional 30 million potential customers" under the overhaul. The officials continued that the tax is "one of several designed so that the industries that gain from the coverage expansion will help offset the cost of that expansion" (Viebeck, "Healthwatch," The Hill, 6/6).

According to National Journal, the bill is expected to be voted down in the Senate (National Journal, 6/6).

House Panel Endorses Bill Aimed at Overhaul Funds

In other health reform news, the House Financial Services and General Government Subcommittee on Wednesday backed by voice vote legislation that would prohibit funding transfers between HHS and the Internal Revenue Service, among other provisions, CQ Today reports (Holden, CQ Today, 6/6).

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