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Sunday, August 19, 2018

The House’s Latest Health Care Vote Puts Campaign Cash Ahead of People

Congress shouldn’t make working- and middle-class families pay for the repeal of a sales tax on one of America’s most profitable industries.

Last week the House voted to increase health care costs on middle-class families in order to protect one of the most profitable industries in the country. And almost nobody noticed. More than three dozen Democrats, oiled by campaign contributions, joined all 233 voting Republicans in voting for a repeal of a 2.3 percent sales tax on the medical device industry included in the Affordable Care Act. They voted to pay for the lost revenues by making families who are fortunate enough to get back on their feet pay more for health coverage.

The vote last week symbolizes most everything that is wrong about our politics, and in particular the politics around the Affordable Care Act, with one very welcome exception. The White House – not known for standing up tall – promised a veto of the legislation.

One way that the Affordable Care Act will be paid for is by new taxes and reduced Medicare revenues from major segments of the health care industry. In return, health care providers will reap greater revenues from tens of millions newly insured people and improved health coverage for tens of millions more. Medical device manufacturers got off easy with the 2.3 percent sales tax considering that, according to Forbes, the industry is one of most profitable in the country (number one on return on assets, number four on return on sales, and number nine on return on equity).

That did not stop the medical device industry from fighting the tax with the usual cry wolf tactics, saying it will cost jobs and hurt small business. An editorial from, of all places, Bloomberg News takes the industry’s arguments apart, one by one. The most glaring example is the charge by the industry’s trade association, AdvaMed, that the tax would cost 43,000 U.S. jobs as manufacturers moved offshore. But since the tax applies to all medical devices sold in the U.S., there is absolutely no advantage in moving jobs offshore. Doing so won’t reduce the tax by a nickel (or a yuan).