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Issues & Insights

Here’s A Bipartisan Tax Cut That Can Pass This Year

Who would have thought it would be Obamacare that would bring Republicans and Democrats together during this most politically contentious of years since the Civil War? Ever since President Obama signed the Affordable Care Act (ACA) into law in 2010, everyone has been complaining about how unaffordable health care is.  

That is because the ACA did nothing but impose a blizzard of taxes and regulation on health care, exactly the opposite of the policies that would reduce health care costs. Unless Congress acts this year, still another Obamacare tax will go into effect on January 1, raising health costs even more.

The original Obamacare law enacted in 2010 included the 2.3 percent tax on medical devices. But that tax was recognized as so destructive that Congress acted to temporarily suspend its implementation in 2015 and in 2017. Unless Congress acts to delay its implementation again this year, it is now scheduled to go back into effect on Jan. 1.

That 2.3 percent doesn’t sound like much. But that was part of Obama’s wily, calculating deception. So-called medical “devices” include expensive hospital equipment like MRI machines that can cost $3 million for just one machine. A 2.3 percent tax on $3 million amounts to $69,000 for each machine.

America invented breakthrough MRI technology, which miraculously enables doctors to see inside the human body painlessly, without surgery. That is why American patients enjoy such modern technology to a much greater degree than anywhere else in the world.

But doctrinaire Socialist Democrats have always detested what they see as unjustified inequality favoring coddled American patients. So they have long been carrying out a bureaucratic war against MRIs and similar advanced technology. This hidden tax not transparent to the American people was part of the subtle, scheming, government rationing concealed in Obamacare.

Americans instinctively understood the risk of denial of health care in the bureaucracy of Obamacare. That is why it has always inspired such distrust and persistent opposition among perceptive voters.

Fortunately, to address the impending tax danger to health care still lurking in Obamacare, moderate Sen. Amy Klobuchar (D-Minn.), Democrat candidate for President, has joined with moderate Senator Pat Toomey (R-Penn.) to co-sponsor legislation permanently repealing the so-called medical device tax.

The tax doesn’t just endanger health care, but jobs and the economy too. When the tax took effect in 2013 to 2015, more than 20,000 jobs were lost in the health care equipment industry due to $30 million in reduced sales under the tax. That led to reduced investment, research and innovation by health care equipment manufacturers, which involved still more subtle rationing resulting from Obamacare.

Bipartisan repeal of the tax can be a first step towards Democrat and Republican collaboration to repeal and replace all of Obamacare, with all of its excessive and counterproductive taxes and regulations. President Trump will campaign on his own new plan for just such repeal and replacement next year. That will be based on increased choice, competition and incentives to increase access to health care, while reducing costs. 

That would include permanent coverage for pre-existing conditions, getting past any debate over whether health care is a right. Such an honest, forthright debate over health care reform is just what America needs, to liberate America’s world leading health care to be better, and more accessible, than ever.

Peter Ferrara is the Dunn Liberty Fellow at the King’s College in New York City, and a Senior Policy Advisor to the National Tax Limitation Foundation. He served on the White House Domestic Policy Council under President Reagan, and as Associate Deputy Attorney General of the United States under Attorney General Bill Barr and President George H.W. Bush.


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