We should repeal the medical device tax on veterans

Given the rarity of bipartisanship these days, I’m always intrigued by issues that seem to instantly gain support from both sides of the aisle. As someone who works in the area of veterans policy, veterans issues, once viewed as largely isolated from partisan bickering, have also recently succumbed to the divisiveness we see in many other policy areas. This is disappointing, but also not surprising, given our current political climate. 

The repeal of the medical device tax is one such issue that recently piqued my interest given its bipartisan and bicameral support. There are two bills currently sitting in Congress that propose to permanently eliminate the device tax. “The Protect Medical Innovation Act” sponsored by Reps. Ron Kind (D-Wisc.) and Jackie Walorski (R-Ind.), currently boasts 239 cosponsors, meaning a majority of members in the House. And its companion bill in the Senate, S.692, authored by Sens. Pat Toomey (R-Pa.,) and Amy Klobuchar (D-Minn,) also has strong bipartisan support. 

Back in 2013, when Walorski was a member of the House Veterans’ Affairs Committee, she expressed concern that the medical device tax would negatively impact the U.S. Department of Veterans Affairs (VA) by raising the cost of life saving medical devices for the agency. In response, VA stated that it “anticipate[d] a 2.3 percent increase in costs to offset the negatively impacted profit margin for the vendors/manufacturers that will be paying the tax. This is based on commentary and published opinions that vendors will pass this additional cost on to all consumers, including VA.”

Walorski is correct to be concerned about the impact of the medical device tax not just because of its impact on jobs, research and innovation, but also on how it impacts veterans. Although VA procurement is governed primarily by federal supply schedule (FSS) contracts, which helps control costs passed on to the government when it comes to pricing, less than half of the nation’s 20 million veterans use the VA for their health care. In other words, more than half of our nation’s veterans seek care in places where this cost will be passed on to them as the consumer.

Although many veterans are generally healthier than the typical U.S. adult upon entering service, given the rigorous physical screening required to join the military, by the time they separate from service, they often evidence poorer overall health than non-veterans.

Regardless of whether they choose to receive health care from the VA or the private sector, many veterans struggle to manage a number of complex, chronic and rare health-care conditions as a result of their service. Accordingly, these veterans are dependent on medical technology, research and innovation to improve their quality of life. Over the past several decades, advances in medical technology have increased life expectancy in the U.S. by over five years. Nonetheless, the average life expectancy for veterans is nearly a year less than it is for non-veterans.

As a levy on the sale of nearly all medical equipment sold in the United States — including important diagnostic tools such as MRI machines, ultrasounds and CT scanners — the medical device tax caused significant disruption to medical research and development that could have improved health-care outcomes for veterans when it was in effect between 2013-2015. 

Though currently suspended through Dec. 31, 2019, the tax nevertheless threatens to siphon away resources that might otherwise be reinvested into the development of improved medical imaging technology if the moratorium is not permanently enacted. According to one recent estimate, in the years the tax was in effect, investments in imaging research and development declined by nearly $34 million — a staggering number for an industry whose innovative breakthroughs quite literally save lives. 

During that same period, the tax also stripped away thousands of high-paying American jobs. Although veteran unemployment has improved significantly over the past several years, veterans ages 25-34 still face employment challenges. Employees in the medical technology industry earn on average $28,000 more than the median household income, but many of these jobs — over 25,000 according to some estimates — evaporated in the years the tax was in effect. This also directly impacts veterans, many of whom are excellent candidates for careers in the life sciences industry based on the skills they acquired during military service.

Obviously, the overall impact on veterans is only part of why the medical device tax should be permanently repealed. To this end, polling data showing that Americans are four times more likely to oppose the tax than support it.

Most importantly, with an overall need to improve bipartisanship in both chambers of Congress, enacting this widely supported legislation should be a no-brainer. It should also serve as momentum for Congress to work together and pass additional legislation. It’s ability to improve the health care and economic outcomes for veterans are merely an added bonus, but one that lawmakers on both sides of the aisle should be proud to support. 

Rory E. Riley-Topping served as a litigation staff attorney for the National Veterans Legal Services Program (NVLSP), where she represented veterans and their survivors before the U.S. Court of Appeals for Veterans Claims. She also served as the staff director and counsel for the House Committee on Veterans’ Affairs, Subcommittee on Disability Assistance and Memorial Affairs for former Chairman Jeff Miller (R-Fla.). You can find her on Twitter: @RileyTopping.