The House voted to repeal the 2.3 percent excise tax on medical devices and another provision from the health care reform law that prevents holders of health savings accounts from buying over-the-counter medicine without a prescription.

The medical device tax is scheduled to take effect in 2013, but the medical device industry has been lobbying heavily to repeal the $29 billion tax, arguing that it would cost jobs. Proponents of the tax say the makers of devices, such as hip replacements, would benefit from the expansion of health insurance coverage in the health care reform law.

The House voted 270-146 on Thursday to repeal the bill, with 37 Democrats and 233 Republicans in support of the Republican-sponsored bill. The bill also included provisions to allow the holders of flexible spending arrangements to cash out up to $500 of the remaining balance as taxable income at the end of the year, instead of forfeiting the balances, as they must now be forced to do (see House Panel Passes Repeal of Medical Device Tax).

“The House has taken a stand for American leadership in medical device innovation and the nearly half million U.S. jobs it supports,” said Rep. Erik Paulsen, R-Minn., who introduced the legislation. “This new ill-conceived tax would force many of our nation’s bright medical technology innovators to lay off workers, move jobs overseas, or worse yet, close their doors altogether. With today’s vote, we show the nation what we can accomplish when we put progress before partisanship. I appreciate the support from my colleagues on both sides of the aisle and look forward to action in the Senate on this vital bill for American jobs.”

Rep. Sander Levin, D-Mich., the ranking Democrat on the Ways and Means Committee, failed to get a substitute amendment introduced that would have instead provided tax credits for small businesses (see House Democrats to Offer Small Business Tax Relief and Jobs Bill). He complained about the medical device industry’s lobbying efforts.

“We will hear today Republican efforts to describe the bill before us to repeal the tax on medical devices as a jobs bill,” he said. “What it really is is another Republican effort to repeal health care reform—step by step, costing $29 billion. We Democrats want more Americans to have access to medical devices.  Health care reform helps do this by expanding insurance coverage to over 30 million individuals, which indeed will help the growth and the innovation of the medical device industry. As was true for other groups with health care benefiting by the increase coverage, the medical device industry was asked to help pay for health care reform so it would be fully paid for, not add to the deficit. They signed a letter with others pledging: “we, as stakeholder representatives, are committed to doing our part to make reform a reality….”  The first signature on that letter is from the CEO of the Advanced Medical Technology Association. Now the Republicans are attempting to give the industry a free pass, contrary to their stated commitment, and the industry has not proposed any alternative to meet their obligation.”

The White House has threatened to veto the bill, and it is not expected to get taken up in the Senate.

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