Policy Documents

The ACA Medical Device Tax: Bad Policy in Need of Repeal

April 9, 2013

This fiscal fact asserts that on March 21, 2013 the Senate voted 79 to 20 to pass a nonbinding budget amendment encouraging the repeal of the Affordable Care Act’s medical device excise tax. This is a 2.3 percent tax on total sales of taxable medical devices by medical device manufacturers that went into effect on January 1, 2013.

The upshot of this act is that, like other excise taxes, it is harmful and will create distortions in the medical device industry, likely leading to higher health care prices for consumer, lower employment, and less innovation. Additionally, the tax is complex and creates additional compliance costs for firms. These consequences argue for the permanent repeal of the tax.