Protect Medical Innovation Act Of 2017
Mr. Speaker, pursuant to House Resolution 1011, I call up the bill (H.R. 184) to amend the Internal Revenue Code of 1986 to repeal the excise tax on medical devices, and ask for its immediate consideration. Mr. Speaker, I ask unanimous…
Mr. Speaker, pursuant to House Resolution 1011, I call up the bill (H.R. 184) to amend the Internal Revenue Code of 1986 to repeal the excise tax on medical devices, and ask for its immediate consideration.
Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on the bill H.R. 184, currently under consideration.
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, today, the House will vote on H.R. 184, the Protect Medical Innovation Act, which will finally repeal the medical device excise tax and eliminate a burden on patients and the companies that create and produce lifesaving medical devices for people all over the world.
The medical device industry is truly an American success story, directly employing more than 400,000 people. In Minnesota alone, more than 35,000 people are employed at almost 700 companies, mostly small companies that you have never heard of. Many of them were started by a doctor or an engineer or an entrepreneur in the garage or in the backyard with an idea to improve or help save someone's life. In fact, 80
percent of all medical device companies have less than 50 employees, and 93 percent have less than 500 employees. The jobs they provide are good, rewarding jobs that pay above-average salaries.
Mr. Speaker, America is a net exporter in medical devices, one of the other reasons why it is an American success story. But back in 2013, the Affordable Care Act imposed a new 2.3 percent excise tax on all medical devices.
Mr. Speaker, 2.3 percent may not sound like much, but it wasn't a tax on profits; it was a tax on sales, on revenue. Usually the government puts an excise tax on things we want to discourage, like tobacco, alcohol, or gas-guzzling automobiles.
Why would we want to discourage medical innovation? Only in Washington would you impose a tax on lifesaving medical devices and then think you are going to help reduce healthcare costs.
Guess what? The device tax caused the loss of over 29,000 jobs. Now, with strong bipartisan support, we have been able to eliminate this onerous tax with suspensions. The last time we suspended this tax, companies responded by hiring more engineers and more technicians and putting more money into research and development projects for these new, lifesaving technologies.
But these innovators need certainty. They need predictability. And a permanent repeal is needed to especially help startup companies from where the next generation of inventions and innovation will come.
Investors will hold back capital in new companies when there is a threat of an excise tax starting back up because it already takes 8 to 10 years, Mr. Speaker, for these companies to become profitable in the first place. This tax raises the bar and makes it even more difficult for them to become profitable.
I have had many conversations with companies that I represent in my community about what this excise tax means to them. I remember having a conversation with a medium-sized company owner who said that without this tax they would be able to have a few more projects online, which meant they would hire two more engineers and two more technicians. Other companies to which I have spoken said they would be able to directly invest more in research and development, creating more high- paying jobs, invent better products. Ultimately, it is about helping more patients.
The good news, Mr. Speaker, is there is strong recognition that we need to eliminate this tax on a bipartisan basis, because it is such bad policy. In fact, very few bills have such strong bipartisan support: 277 cosponsors. Mr. Speaker, 44 of those cosponsors are Democrats across the aisle.
I pledge that I will continue working with Senator Klobuchar in the Senate across the aisle, and my colleagues, to get this over the finish line, because there are very few issues that would unite an Elizabeth Warren and a Ted Cruz, but this, Mr. Speaker, is one of them.
Mr. Speaker, I would encourage all Members to support this legislation, and I reserve the balance of my time.
Mr. Speaker, I yield 2 minutes to the gentleman from Indiana (Mr. Banks), someone who represents a State that is steeped in medical technology jobs and has been a leader in championing the repeal of this tax.
Mr. Speaker, contrary to some of the claims we heard a little bit before about the bill doing nothing to help everyday, average Americans, I will just remind Members that this bill reverses a harmful tax that is hurting job growth and innovation across the country.
Access to good-paying jobs and innovative medical products is critically important, and I would argue that that is really important for everyday Americans.
I would agree, also, with what was said earlier. Americans need certainty. This is an industry that needs certainty if we are going to be able to invest in new innovations, new inventions, to keep patients at the forefront of lifesaving and life-improving technology, to make sure their healthcare is the model of the rest of the world.
Mr. Speaker, I yield 3 minutes to the gentlewoman from Utah (Mrs. Love), who has been a strong voice for innovation, not only in her State but within our conference here in the House of Representatives, in repealing the device tax.
Mr. Speaker, I yield an additional 1 minute to the gentlewoman from Utah.
Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I thank the gentleman for sharing his perspective from California. I think of Minnesota and California and Massachusetts and some other States that have a propensity of strong ecosystems of medical technology, and those jobs, we know, are very, very important. We want to see those continue.
I just want to mention, Mr. Speaker, what we don't want to go back to, because these are the stories we were hearing prior to our suspension, why we need to permanently repeal this tax.
I remember speaking to a company in Plymouth, Minnesota. They were pretty clear. They said: Instead of 10 projects, we are only going to have 6 projects funded with this tax in place. That means too few engineers, too few technicians while that device tax was in effect.
I talked to another company that was actually in Texas. They had laid off an employee that had been employed for 22 years, and then they had laid off 25 people, deferring the hiring of another 15 employees because of that tax being put in place.
Another medical company in Shoreview, Minnesota, told me they had to borrow $100,000 a month from the bank just to pay the device tax because the tax was on sales and revenue, not on profits. That is a high-risk tragedy, Mr. Speaker, in order to keep these companies alive.
There is a company in New York that was trying to finance a new cancer therapy using gamma radiation, and they struggled to raise the necessary funds that were necessary to complete the project because the medical device tax was discouraging investment in lifesaving innovation.
And then, Mr. Speaker, I remember having a conversation with an employee, someone from my district, and he came up to me and said: Mr. Paulsen, I have been employed at this medical device company for 21 years, a strong medical device manufacturer, but because of the tax, I have lost my job. Now his family struggled at his new job because his wages were $40,000 less than where he was before he was laid off, all because of that device tax. His vacation time was cut in half, and his healthcare costs also went up.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, I yield myself such time as I may consume while we wait for one additional speaker.
Mr. Speaker, let me just remind folks where we are right now. Think back to 2013, 2014 when this tax was first put in place. We heard earlier from one of our colleagues who had said: Do you know what? The medical device industry was a part of putting together the Affordable Care Act, and they agreed to this.
Actually, that is a myth. It is not true. I have talked to numerous medical device manufacturers, small, medium, and large, as well as the associations, that said they had no part in agreeing to that. In fact, when this dollar amount came up as a part of the Affordable Care Act, they backed into it. There was some dollar amount assigned, and that is how he backed into a 2.3 percent excise tax.
And, again, just a reminder, an excise tax is a tax on your sales and revenue, not on your profits. For companies that take 8 to 10 years to become profitable in the first place, that is a high hurdle when you are trying to attract new capital, new investors in order to take the risk that this new technology is going to be successful.
You have already got to go through the FDA. You have got to go through a rigorous process, go through a gold standard, and then you have to make sure that you are going to potentially have CMS offer a reimbursement policy for your devices.
So there is a whole host of, or a multitude of, risk factors that go in already when companies are thinking of starting up to actually be a part of this strong ecosystem of providing medical technology and lifesaving innovation that goes out to help our patients.
The good news is, if we keep this industry strong in America, if we can repeal this tax permanently, we will not only be improving healthcare outcomes around the world; we will be keeping those jobs here. We will be keeping the headquarters here in the United States.
So it is not just some of the tax reforms you pass, Mr. Speaker. It is about giving more certainty and more predictability by repealing a tax that never should have been put in place in the first place.
And I think with strong bipartisan support, both on a vote today in the House and potentially once again in the Senate--I think the last time we had a vote leading up to President Obama signing a temporary suspension of the device tax, we had enough votes in the House to override a Presidential veto. That is what got the attention of the Senate. That is what got the attention of the President at that time, and we actually made it the law of the land, 2-year suspension. We renewed another 2-year suspension.
But now is the time, Mr. Speaker, to actually make this permanent, to put ourselves in a position to make this repeal permanent, to put ourselves in a position where we can guarantee that American innovation is going to be strong and steadfast for years and decades to come. We can keep this American success story alive.
We have got a host of other challenges, I know, as we look towards the medical device industry. We have a hearing going on right now on trade,
for instance. We don't need to do anything else with potential tariffs or quotas in different areas that put additional uncertainty on this industry, on these high-paying, high-quality jobs. So this is one initial effort that we can make today on the House floor, with a strong bipartisan vote, to make sure a permanent repeal is also the law of the land.
Mr. Speaker, I am looking around for my colleague from Indiana, who I think is on the way right now.
Mr. Speaker, I reserve the balance of my time.
Announcement by the Speaker Pro Tempore
Mr. Speaker, I yield 2 minutes to the gentlewoman from Indiana (Mrs. Walorski), who has been a champion of not only repealing this tax, but fighting hard for the medical device industry in her home State.
Mr. Speaker, as I close, let me remind my colleague, because he had mentioned eliminating the individual mandate as a part of the tax reform that was enacted recently, according to the IRS, 79 percent of the 6.6 million people who paid the penalty in 2015 had incomes below $50,000. These are middle class people.
I yield to the gentleman from Massachusetts.
Mr. Speaker, reclaiming my time, on the individual mandate, 6.6 million people who paid the penalty had incomes below $50,000. These are middle class people who had to pay the fine instead of buying overpriced ObamaCare coverage that they could not afford. Now, starting in 2019, they are not going to have to do that anymore. Republicans think that is a good thing.
Let me close back on the bill, though, Mr. Speaker.
The good news is that both Republicans and Democrats here today agree and understand that the medical device excise tax does more harm than good, and it has to be repealed. We heard testimony and speakers today on both sides of the aisle. We will have a strong, bipartisan vote to repeal this tax permanently.
We have already had a suspension twice. But we need to give this industry certainty so that we can make sure that this American success story not only survives, but thrives.
It is about high-paying jobs with net exports around the world. This makes sure that patients not only in the United States are going to have access to new medical technology devices, for baby boomers, seniors, and those getting up in their elder years with new devices. This is really critical for the innovation that is going to help to make sure that we are protecting patients around the world, keeping headquarters here, keeping jobs here, and improving healthcare outcomes.
Today, we have an opportunity to help. It is helping those small startups that are part of the very ecosystem that has made this industry so strong in the United States that provides these jobs, and making sure that entrepreneurs, doctors, engineers, and folks who come up with an idea in the backyard or in the garage can see their idea come to fruition.
So let's remove this threat to innovation. Let's remove this job- killing tax once and for all. There are 277 cosponsors in the House. How many bills actually get that many cosponsors of Democrats and Republicans? Let's continue to show the American public that what we are doing here in Washington on this issue is results oriented, is solution oriented, and we are sensitive, and we understand that.
Mr. Speaker, I ask everyone to vote for the passage of H.R. 184, and I yield back the balance of my time.
Mr. Speaker, on that I demand the yeas and nays.