Though Republicans this week have already voted to change an employer mandate in the Affordable Care Act, healthcare providers are more focused on what the new majority in Washington will do with the medical device tax.
This week the 114th Congress convened with a Republican majority in the House and Senate for the first time since passage of the Affordable Care Act, and the House on Thursday approved legislation waiving fees on businesses that do not offer health insurance to employees working fewer than 40 hours per week. The president has promised to veto the measure.
But a second legislative proposal to do away with the medical device tax is likely to pass, said Dr. Paul Keckley, managing director of the Navigant Center for Healthcare Research and Policy Analysis.
Healthcare providers wonder what the GOP majority in Congress will do with the medical device tax. - Tweet this
Even if the president vetoes the measure, which the White House has indicated would not be the case, the bill would receive the two-thirds legislative majority needed to override the veto, Keckley said.
“They will be in favor of that,” Keckley said of providers and the 7,000 medical device companies in the United States.
The medical device tax, imposed to offset Affordable Care Act expenses, is projected to raise $29 billion over the next 10 years, according to Keckley. It imposes a 2.3 percent tax to companies that have revenue over $100 million.
“That tax is passed through by the device manufacturers to hospitals,” he said. “How many of the hospitals (are saying), ‘If this goes away, can you give back some of this money this took from me?’”
The $90 billion medical device business has a concentration of companies in California, Massachusetts, New York and Minnesota, and much of the support for repealing the tax is coming from legislators on both sides of the aisle from those states.
White House officials have said the administration would be willing to review the tax provided there is a way to replace the funding.
CFO’s and other administrators are used to seeing proposed changes to the Affordable Care Act since the president signed the bill into law in 2010, according to Keckley.
“There’s been 38 changes to the law so far,” he said. “Most providers are tip-toeing in, wondering which ones will be sticking.”
The ACA encourages transparency in a myriad of ways, from a switch from fee-for-service to value-based payment, accountable care organizations and avoidable readmissions, he said.
“What all attempt to do is change the way providers are paid,” Keckley said.
The result is consumers are shopping around for the best deal when hospitals are squeezed by lower reimbursement rates from the government and push-back from insurance companies, he said.
CFOs are seeing the margins in their core business shrink once again.
“For the fifth consecutive year, the operating margin of the core is down, to 2.1 percent,” Keckley said. “We know the margins are shrinking in the traditional lines of business they deliver.”
While some Republicans are looking to the party to do away with the Affordable Care Act, most GOP leaders are concentrating on chipping away at its edges, knowing the two-thirds majority is not there to override the president’s veto.
Republicans also have their sights on the White House in two years.
“There’s real pressure,” Keckley said. “They’ve got to put something out there while fixing and repairing the ACA. It lets them go into the 2016 cycle with something that sounds like it’s plausible and practical.”
Twitter: @SusanMorseHFN