On March 25, when Congress passed the Health Care and Education Reconciliation Act (HCERA) to solidify the Patient Protection and Affordable Care Act (known as “PPACA” or “the Affordable Care Act”), HCERA included a 2.3-percent excise tax on all medical device manufacturers and importers, potentially including O&P manufacturers and importers. The day before, Senator Orrin Hatch (R-UT) had attempted to introduce to HCERA a line item that would have exempted from the tax any devices sold to individuals covered under the Veterans Affairs (VA) healthcare programs or under TRICARE, the civilian health benefits program for military personnel, military retirees, and their dependents. The item was listed as SA 3644, and its stated purpose was to “protect access for America’s wounded warriors.” The item was tabled on the day of its introduction by a vote split along party lines, with all participating Republicans and four Democrats voting to continue it and all other participating Democrats voting to table it.
On July 2, the line item reappeared in the national media after the anti-tax group, Americans for Tax Reform, posted a press release to PR Newswire titled “Wounded Warriors Face New Tax this Independence Day: Senate Democrats Tax Prosthetic Limbs and Other Vital Medical Devices, Refuse to Exempt Veterans.” The release referred to the excise tax as “a new tax on medical devices such as prosthetic limbs, pacemakers, and wheelchairs. This tax…contains no exemption for the nation’s 22 million veterans.” It continued by claiming that “SA 3644 would have prevented the medical device tax from hitting veterans covered by the Veterans Healthcare Program or TRICARE for Life.”
White House Replies
The release was picked up by a number of news outlets, appearing with titles such as “Wounded Vets Betrayed by ObamaCare Tax on Prosthetic, Medical Devices—Why?” The media attention sparked an official White House rebuttal posted to The White House Blog. The post, titled “How Affordable Care Act Helps Veterans” obliquely referred to the press release as one of several “rumors designed to misinform the American people about the Affordable Care Act.” The White House then emphasized the following three points:
- “Today, wounded veterans and active duty military receive prosthetic devices from the VA or TRICARE at no cost. That won’t change under the Affordable Care Act.”
- “This is not a tax on consumers, and claims that the tax will result in higher prices for prosthetics or other medical devices are wrong. Prices and reimbursements for medical devices will continue to be negotiated between the device industry and insurance companies, retail establishments, and the federal government in the case of veterans and active duty service members.”
- “We know medical device manufacturers will prosper under the new law—the Affordable Care Act expands health insurance coverage to more than 30 million Americans and these newly insured individuals will use products made by the medical device industry.… The new tax applies to this industry and will help ensure we provide more Americans with affordable coverage choices.”
In a post to OANDP-L, listserv moderator Paul Prusakowski, CPO, FAAOP, also stated that Peter Thomas, general counsel for the National Association for the Advancement of Orthotics and Prosthetics (NAAOP), clarified two other issues related to the article. Namely, that the excise tax is scheduled to be implemented in 2013, not immediately, and that the tax provision already contains an exception for devices sold at retail for individual use.
“Whether O&P or part of O&P will be exempted under this language is not yet known,” Prusakowski’s post concluded.