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Why the Medical Device Tax Came to Rule the Debt-Ceiling Talks

An X-rayed defibrillator
An X-rayed defibrillatorPhotograph by Scott Camazine/Getty Images

People following the negotiations to end the government shutdown and raise the debt ceiling may have been puzzled in recent weeks to learn that the talks have hinged at times on a fairly obscure component of the Affordable Care Act: the medical device tax. One of Republican Senate Minority leader Mitch McConnell’s conditions for ending a standoff has been repealing the tax. What is the device tax and how did it become so important? A brief tutorial:

What is it?
The medical device tax is a 2.3 percent excise tax on such items as defibrillators and pacemakers and is meant help cover the cost of Obamacare’s expansion of the health care system. When the ACA was drafted, its supporters believed that industries likely to benefit financially from the overhaul should help pay for it. Insurance companies would pay more, as would the pharmaceutical industry. The ACA’s advocates thought it only fair that device makers should contribute, too. The tax, which went into effect in January, is expected to raise $30 billion over the next decade. It’s not a huge amount in the grand scheme, but everything helps when it comes to finding ways to keep the federal budget in check.