Obamacare’s Shrinking Revenues: Medical Device Excise Tax

The House of Representatives voted today to repeal Obamacare’s medical device excise tax, the 2.3 percent tax levied on medical devices sold in the United States. The tax is certainly harmful. Whether it deserves the highest priority in repealing Obamacare, we’ll leave to discuss another day.

Although, repealing the medical device excise tax does nothing to repeal Obamacare. It just gives us a deficit-financed Obamacare. This is the second time the Republican-majority Congress has voted to increase deficit spending on health care this year, without winning any meaningful reform to any program.

With 46 Democrats joining the Republican majority, the votes in favor added up to 280, just 8 short of the number needed to override the promised presidential veto. We’ll see how it does in the Senate.

The bill was scored by the Congressional Budget Office (CBO), which determined that it would increase the deficit by over $24 billion in the next 10 years. We seldom see explicit budget scores of individual Obamacare taxes. This score overlaps the original 2010 CBO score for four years, 2016 through 2019. Comparing the two scores (see Table 1) shows how much the tax’s estimated revenues have shrunk – 36 percent, from $12.7 billion to $8.1 billion over the period.

I’ve previously noted how Obamacare’s spending estimates have also dropped. We need a new, comprehensive CBO score of all Obamacare provisions, so we know what we’ll be tackling when it comes time to repeal and replace it.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s new book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.