Medical device group breaks ranks, backs GOP health care overhaul

Amendments awaited attention as the House Energy and Commerce Committee held a mark-up hearing for the American Health Care Act in Washington on March 9. Stephen Crowley/The New York Times

Groups representing doctors, nurses, hospitals, and consumers have all lined up against the Republican bill to replace the Affordable Care Act, or ACA, arguing that the proposed changes being debated in Congress would eliminate health care coverage and benefits for millions of Americans.

But one group conspicuously absent from the ranks of the opposition has been the organization representing medical device makers, a large sector in Massachusetts, which last week came out in support of the GOP alternative, the American Health Care Act.

The Advanced Medical Technology Association, or AdvaMed, endorsed the legislation, solely because of a provision to repeal a medical device tax that the industry has been fighting for years. AdvaMed was among the business groups whose support was cited by Sean Spicer, President Trump’s press secretary, in a briefing with reporters last week.

J.C. Scott, AdvaMed’s chief advocacy officer, made it clear in an interview that the national trade and lobbying organization is seizing on the Republican bill as a way to eliminate the excise tax — which amounts to a 2.3 percent levy on annual device sales. The assessment was initially imposed to help fund President Obama’s ACA, which extended coverage to millions of people who had been without health insurance. The tax took effect on Jan. 1, 2013, but was suspended for two years at the end of 2015. It is set to be reinstated next January unless a repeal is enacted.

“Our engagement on the broader [GOP] bill is connected to and contingent on repeal of the device tax,” Scott said. “We’re laser-focused on that piece of it.”

While groups like the American Medical Association, the American Hospital Association, and the American Nurses Association oppose the Republican bill, Scott said, “Every association is representing the interests of its membership, just as we do.”

ACA defenders argue the device industry is being short-sighted because they say the proposed Republican replacement would make it harder for low- and moderate-income patients to afford everything from heart pumps and stents to prosthetic knees and hips.

“A relatively small part of the total subsidy pot [for the ACA] comes from the medical device tax,” said Brian Rosman, policy and government relations director for the Boston-based consumer advocacy group Health Care for All.

“That funding allows people to get insurance, and nobody can get medical devices without insurance. Having more people with health coverage gives them a better market for their devices.”

Tom Sommer, president of the Massachusetts Medical Device Industry Council, known as MassMEDIC, led a team of executives from the state on a trip to Washington, D.C., last week to lobby members of the Massachusetts congressional delegation to repeal the device tax.

Unlike the national trade group, MassMEDIC has stopped short of supporting the Republican bill. The bill is being opposed by the state’s all-Democratic delegation, even though many of its members also favor repealing the device tax. The device industry includes 480 companies with about 24,000 employees in Massachusetts, according to a MassMEDIC report released in 2015.

“We’re not taking a position for or against universal health care coverage,” Sommer said.

“We’re certainly not opposed to it. But our focus has been on the tax, which has been a job killer for the medical device industry. We don’t get to choose the vehicle for repeal. Our delegation is not in the room making the decision.”

While the industry is concerned with who receives coverage under the new plan, Sommer said, “I haven’t seen any analysis of the impact of the [Republican] bill on demand for medical products. We’re not sure what the fallout will be.”

MassMEDIC members, including representatives from Boston Scientific Corp., Medtronic PLC, Johnson & Johnson, and Smith & Nephew PLC, met with Massachusetts Senator Edward Markey, an outspoken critic of the device tax, and staffers from the offices of other members of the state’s congressional delegation in Washington.

Nationally, medical device makers cut about 29,000 jobs from 2012 to 2015, when the excise tax was in effect, and also scaled back on research and capital expenditures, according to Scott at AdvaMed. Stryker Corp., based in Kalamazoo, Mich., cited the tax when it slashed more than 1,100 jobs in 2012.

But since the tax was suspended, many companies have resumed hiring. Among the device makers expanding in Massachusetts during the past year, Sommer said, have been Abiomed at its headquarters in Danvers and Smith & Nephew, a British company, at its sites in Mansfield and Andover.