By Samantha Aster
Although the U.S. Chamber of Commerce has said it will abandon its feverish efforts to repeal the Affordable Care Act (ACA), it appears to be fighting to block funding for the law rather than trying to kill the program outright. With an eye toward making the ACA unworkable, The Chamber is now focusing on repealing two key funding components: the medical device tax and the annual fee on health insurance companies.
Were the Chamber to succeed in removing funding, parts of the law would cease to function properly and would eventually fail altogether. Public Citizen does not endorse the ACA, but we do support the law being fully funded in order to move toward state-level single-payer systems, which the law’s waiver process enables. States that want to establish stronger programs can do so using this mechanism, and by establishing state level single-payer systems we hope to clear a path to eventually move toward Medicare-for-all at the federal level.
The Chamber in its lobbying efforts and messaging argues the ACA imposes substantial financial burdens on employers and individuals, and frequently labels the law a “job killer.” In making these claims, the Chamber consistently relies on exaggerated and overstated data which, when given a second look, undermine the integrity of its argument.
The medical device tax: A necessary revenue stream
The ACA is funded in part by a 2.3 percent excise tax on manufacturers and importers of medical devices. The medical device industry and the Chamber argued that the tax would increase costs, “suppress innovation” and “kill jobs,” but this could not be further from the truth.
Not only can the medical device industry afford the tax – with estimated total sales of over $100 billion – but the industry has been accused of relying on anti-competitive practices that result in almost no price competition in the market. The lack of transparency in pricing and the industry’s coziness with physicians stifles innovation, since manufacturers have little incentive to create or improve devices that increase quality of care. This tax, coupled with the ACA’s focus on cutting costs, may provide incentives for manufacturers to find ways to deliver more cost-effective care.
The U.S. Chamber pointed to a recent survey to support its opposition to the tax. The survey, conducted by the Advanced Medical Technology Association, the trade group representing medical device manufacturers, claims that the tax has forced medical device manufacturers to eliminate jobs, reduce innovation and move jobs overseas. The Center on Budget and Policy Priorities has already questioned the credibility of the survey because it is not representative of the entire industry, misrepresents how the tax works and fails to take into account offsetting changes in federal fiscal policy.
There is no evidence that the tax will increase costs for consumers, since the industry stands to gain business under the ACA (which relies in part on the tax), and because medical device spending represents less than 1 percent of total health care spending. With greater business and innovation in the industry, it is unlikely that this tax will “kill jobs.” The U.S. Chamber, in relying on inaccurate and exaggerated information, has made wild claims with no basis in reality.
An annual fee on insurance companies rather than taxpayers
The annual fee on health insurance companies was imposed to help pay for health care reform by expanding coverage for all Americans and slowing the growth of costs without adding to the budget deficit. Repealing the tax would cost taxpayers $166 billion over the next nine years to make up for the lost revenue due to pay-as-you-go rules, and might encourage the repeal of other revenue measures. This would leave Congress with two choices: reduce ACA and other spending, or increase the budget deficit, both of which are non-starters in the current Congress.
The U.S. Chamber argues that the tax will significantly raise premiums for small business and individual consumers; however, this is only part of the story. While premiums are expected to be 2 to 2.5 percent higher than they would without the tax, the ACA as a whole works to slow the growth of premiums. The Congressional Budget Office actually estimates the premiums will be lower for most employers, and the Center on Budget and Policy Priorities predicts a greater positive effect from the tax on health care in the country.
The U.S. Chamber of Commerce is trying to surgically remove the heart of the ACA – its revenue flow – with claims based on misinformation, in an effort to stop the body from functioning. The Chamber claims to have given up the fight against the ACA as a whole, but its actions say otherwise. Were the Chamber to succeed in repealing these two components of the ACA, we would be thwarted in the push to establish state-based single-payer systems, which already are building momentum in states such as Vermont and California. Our healthcare system deserves better.
Samantha Aster is a health care policy fellow in Public Citizen’s Congress Watch division.