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Medical Device Excise Tax: What the 2014 Elections Mean

Posted by Adam Desjardins

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Nov 13, 2014 1:18:00 PM

:: 2 minute read ::

Medical_Device_Excise_Tax_ElectionsAs the election results from November 4, 2014 sink in, it’s natural to wonder whether there will be any impact on our industry. With the control of the US Senate shifting to Republicans for the first time since 2008, one change that could be on the horizon is the repeal of the Medical Device Excise Tax (MDET).  

The MDET was part of the Affordable Care Act (ACA) passed in President Obama’s first term that went into effect January 1, 2013. The revenue from the tax is intended to offset some of the increased federal spending brought about by the ACA. The law calls for a 2.3% tax on sales of medical devices, specifically the first sale. The tax does not apply to refurbished equipment, but buyers of newly manufactured or imported systems in the last two years probably saw an increase in prices. 

The Repeal Movement

Like most taxes, the MDET remains unpopular and, in the time since the law passed, there seems to have been bi-partisan support for its repeal. A bill which included the repeal of the MDET passed the house in early 2013 but was never taken up by the Senate under Democrat control. The repeal of the MDET was also part of the Republican demands during the government shutdown standoff in late 2013. It didn’t gain any traction in that encounter either.

The fact that the MDET couldn’t be repealed had less to do with the number of votes that it could garner, and more to do with it never being brought up for a vote in the Senate. Prominent Democrat Senators like Elizabeth Warren and Al Franken support its repeal, but leadership of the Senate didn’t bring the repeal up for a vote. 

At the White House 

As most of us will recall from civics class, though, even if congress decides to pass the repeal, it still would have to be signed into law by the president. It’s anyone’s guess as to whether Mr. Obama would sign a repeal of the MDET. Previous efforts to repeal the tax did not have the White House’s support. From the administration’s perspective, the MDET funds Mr. Obama’s signature legislation and the repeal could be seen as a political concession; the type which he isn’t known for making.

For the Time Being 

The 2.3% premium on new equipment will continue to be passed along to the imaging buyer (you can be sure the manufacturer is not absorbing this cost). The best way to avoid paying the MDET is to buy refurbished domestic equipment. Moreover, even if the MDET ultimately is repealed, it’s still a better time than ever to consider refurbished. With or without the MDET attached, the enactment of the ACA has forced the medical industry as a whole into a more budget-conscious direction. The 2.3% your facility would save on new equipment purchases with a repeal of the MDET pales in comparison to the 20-40% average savings that come with buying refurbished.

In the end, MDET is certainly not a death knell for your chances of upgrading or acquiring new equipment. There are savings to be had right now that can ease the implications of both the ACA and its excise tax component. Contact us directly or use the button below to see a sample of refurbished market pricing.

See Refurbished Equipment Pricing Info

Written by Adam Desjardins

author of blog post

Adam Desjardins is General Counsel at Block Imaging, representing the company in negotiation, contract review, and litigation. Adam works out of San Diego, CA where he lives with his wife and son. He spends his free time remodeling his home and tinkering with his ’67 Ford Mustang.

Topics: Medical Imaging News

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