Trump signs permanent repeal of medical device tax opposed by Welch Allyn
Sunday, December 29, 2019
WASHINGTON – President Donald Trump has signed a bill that permanently repeals a tax on medical device manufacturers, including Welch Allyn of Skaneateles, that Congress passed in 2013 to help pay for Obamacare.
The repeal of the 2.3% excise tax on medical devices was among a series of tax breaks tucked inside a $1.4 trillion package of spending bills for fiscal 2020.
Congress approved the spending bills last week and Trump signed the legislation into law Friday night aboard Air Force One while traveling to Florida for the holidays.
When the medical device tax became effective in January 2013 it was expected to raise almost $30 billion over 10 years to help pay for the Affordable Care Act, former President Barack Obama’s landmark healthcare law.
But after the medical device industry spent more than $110 million lobbying against the tax, Congress passed separate measures that suspended the tax for 2016 and 2017, and again for 2018 and 2019.
The new legislation permanently repeals the tax without replacing the lost revenue for the Affordable Care Act.
Chicago-based Hillrom, which owns Welch Allyn, said the tax repeal is welcome news for the company, which employs about 1,000 people in Skaneateles Falls.
“The permanent repeal of the medical device tax represents a huge win for patients, caregivers and continued medical innovation,” Howard Karesh, vice president of communications for Hillrom, said in a statement.
“The absence of the tax over the last several years allowed Hillrom to add 100,000 square feet to our Skaneateles Falls facility and bring more than 100 new jobs to Central New York,” Karesh said.
Hillrom opened a $12.7 million expansion of Welch Allyn’s manufacturing plant on State Street Road in Skaneateles last year. Hillrom bought the privately-held company from the Allyn family in September 2015 for $2.05 billion.
The tax’s repeal won broad bipartisan support in Congress, including from Senate Democratic Leader Charles Schumer, D-N.Y., and Central New York’s two members of Congress, Reps. John Katko, R-Camillus, and Anthony Brindisi, D-Utica.
Brindisi and Katko sent a Sept. 19 letter signed by nine New York House members to Republican and Democratic leaders of both the House and Senate, urging their respective parties to pass the repeal.
The letter, citing data from the U.S. Department of Commerce, said the medical technology industry lost nearly 29,000 jobs in the United States when manufacturers were required to pay the tax from 2013 through 2015.
The medical device industry employs about 20,000 people in New York, contributing about $7.4 billion a year to the state’s economy, according to the medical technology industry.
The tax’s repeal will likely spur new investment by the industry in Upstate New York, said Win Thurlow, executive director of the MedTech Association, a Syracuse-based trade group that represents medical device makers.
“I think the best news about this permanent repeal is that it provides the industry with the certainty it needs to expand and grow,” Thurlow said.
A June 2015 analysis on the impact of the tax by the independent Congressional Research Service concluded that the industry would likely pass on the extra costs to consumers.