Why Congress Shouldn’t Delay Obamacare’s Funding Sources Without Finding New Solutions To Finance Reform

The Wall Street Journal is reporting that 17 Democratic senators and senators-elect have joined Republicans in calling for a delay on Obamacare’s 2.3 percent surtax on most medical devices.

Device manufacturers have been trying to get the tax onto the chopping block as part of budget negotiations over the so-called “fiscal cliff,” setting up a showdown with the White House over an important Obamacare funding mechanism that proponents say will be balanced out by an influx of newly-insured, paying Americans into the health care market:

The Democrats’ support could give new momentum to the industry’s intense lobbying campaign to repeal or delay the 2.3% tax on device sales, which companies say will hurt profits and lead to U.S. job losses. However, they face a battle because other Democrats, as well as the White House, oppose any postponement.

“It’s already law; they’re not going to budge on that,” said Bart Stupak, the former Democratic congressman who is now an attorney at Washington law firm Venable LLP.

The tax, part of the health-care overhaul bill passed in 2010, is expected to generate $30 billion over the next 10 years to help pay for expanded health insurance. Along with the device industry, the law also placed new taxes and cost-cutting measures on the pharmaceutical, hospital and insurance industries under the premise that the newly insured will translate into new customers.

But as ThinkProgress has previously reported, repealing or delaying the device tax could prove to be a bad deal for Americans if Congress does not find an effective, alternative revenue source for funding Obamacare’s vast insurance expansion. While it is important for the tax to be applied in a way that doesn’t burden patients, hospitals, and smaller manufacturers, delaying the tax simply means putting off establishing reliable funding sources for Obamacare.


$30 billion over the next decade — which the health reform law will use to extend coverage to previously uninsured Americans through the state-level health exchanges and the Medicaid expansion — isn’t going to come out of thin air. And Congress’s mercurial approach to budgeting doesn’t exactly inspire confidence in lawmakers’ ability to make difficult fiscal decisions. Since the health reform law already imposes taxes on wealthier Americans and consumers who purchase top-of-the-line insurance plans, Congress will either have to get creative or get on board with raising more Obamacare revenue to avoid raising the cost of Americans’ health care.

The Republican-led House has already voted to repeal the device tax.