With the presidential election less than two weeks away, there isn’t a clear indication of how the final outcome will affect the medtech industry. During last week’s final presidential debate, candidates Hillary Clinton and Donald Trump threw punches on healthcare issues surrounding abortion and the Affordable Care Act. Clinton and Trump have both expressed concern over the ACA: During the second debate, Clinton said she was going to “fix” it, while last week Trump said, “one thing we have to do is repeal and replace the disaster known as Obamacare”.
Clinton’s campaign has not commented on one of the biggest issues brought on by the ACA that is affecting medical device companies: The 2.5% medical device excise tax, which was put on a two-year moratorium last December.
At this year’s AdvaMed conference, former HHS Secretary Tommy Thompson said that if Trump wins the election his administration would repeal the tax. If Clinton wins, it’s possible that the tax will be suspended.
“It will start coming back to the agenda December 31, 2017. I think one expectation could be it’s a give one, take one—so if I put the medical device tax back into play as part of the ACA, maybe I will give you something—a [tax] provision that will be like a one-time holiday,” says Arta Ural, Ernst & Young Partner in Transactional Advisory Services. “We don’t expect it to happen in 2017, because they have bigger, better issues to tackle. But ACA will clearly be going through some iterations as they figure out better coverage, etc., [and] things like the excise tax as part of the ACA will have to be looked at in a grander scheme of things. That’s more on the ‘18, ’19 [agenda].”
According to John Babitt, EY Partner in Transactional Advisory Services, democratic senators in states including Minnesota, Massachusetts and Illinois will feel immense pressure to extend the suspension of the tax. “I do feel like it will be a political hot button—they jammed this through as part of something broader, and everyone is doing their fair share for it to be very difficult for them to stomach the politics of letting this come back.”
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