New GOP majority looks for ways to target Obamacare

Republicans, in control of both houses of Congress for the first time since Democrats passed Obamacare, are taking a new approach against the president's signature domestic policy achievement.

After years of symbolic but unsuccessful votes to repeal the Affordable Care Act, Republican lawmakers now are working to undercut the law by focusing on unpopular elements that have also been criticized by some Democrats: a controversial tax on medical devices, for instance, and a requirement that companies offer health coverage to employees who work a shortened week.

The 2.3 percent levy on MRI machines, pacemakers and even tongue depressors has been at the center of an intense and long-standing lobbying effort by high-tech manufacturers, including those in Maryland, who say the excise tax reduces the money available for hiring and research.

Restaurateurs and retailers, meanwhile, have fought fees on businesses that don't provide insurance to employees who work 30 hours a week, which they say encourages employers to cut workers' hours.

A Democratic Congress passed the health care law in 2010 without a single Republican vote. After Republicans won control of the House in that year's election, they voted dozens of times to repeal the law. But with the Senate still controlled by the Democrats, the effort never went anywhere — and if it had, President Barack Obama would certainly have vetoed it.

Now that Republicans control both the House and the Senate, the party's leaders have put their desire for an outright repeal on hold. Instead, they see hope in the shift to smaller measures intended to chip away at the law's funding.

"We should start by repealing the medical device tax, restoring the definition of a work week to 40 hours, allowing people to buy insurance across state lines, and ensuring that more American families can keep the health insurance plans they like," said Sen. Lamar Alexander, a Tennessee Republican and the new chairman of the Senate health committee.

Maryland is home to more than 500 life science firms, according to the state Department of Business and Economic Development, many of them attracted to Johns Hopkins Medicine and the burgeoning Interstate 270 biotech corridor. The industry employs about 33,000 people.

Several of the companies said the device tax, which has been in effect for two years, has had a tangible impact.

"There are absolutely concrete effects," said Ric Hughen, vice president of sales and marketing at Lutherville-based CSA Medical, which has delayed making a few hires partly because of the tax.

The company, with roughly 50 employees, has developed a device that allows doctors to use liquid nitrogen to flash-freeze and destroy unwanted tissue.

The tax is "not a 'stopper,' but it is a 'slower,'" Hughen said. "It slows everything down."

Vincent Forlenza, chairman, CEO and president of Becton, Dickinson and Company, a New Jersey-based company with a substantial presence in Maryland, said the tax "adds a significant burden to companies like ours that are working to maintain America's global leadership in the development of medical technology."

In its annual statement to investors, BD said the tax increased selling and administrative expenses by $14 million in 2014.

Independent analyses suggest the industry is overstating its case. The nonpartisan Congressional Research Service wrote last year that the tax would cause output and to fall by no more than two-tenths of 1 percent.

Several large medical device lobby groups, meanwhile, struggled to identify a single company in Maryland willing to discuss the impact on its operations.

"From a business perspective, we wouldn't do anything differently" if the tax is repealed, said Dorothee Heisenberg, CEO of Clear Guide Medical. The Baltimore firm has developed a device that makes it easier for doctors inserting a needle to hit their target, such as an organ or a tumor.

"It's not that big of a deal," Heisenberg said of the tax.

Politically, though, the device tax is ripe for repeal. Republican Rep. Erik Paulsen of Minnesota has enlisted a majority of the House as co-sponsors, including more than two dozen Democrats, on a measure he introduced this month to abolish it.

Seventy-nine senators — Maryland Democrats Barbara A. Mikulski and Ben Cardin among them — voted to do away with the tax in a nonbinding resolution in 2013.

"We have a very strong medical device presence here," Mikulski said in an interview. "My job as senator is to keep jobs in Maryland."

But there's a caveat to the Democratic support: Mikulski, Cardin and others want Congress to find a way to replace the estimated $30 billion in revenue the tax is expected to raise over a decade.

"The people who are proposing to repeal this tax, not a one of them has proposed how to make up the lost revenue," said Paul N. Van de Water, a senior fellow at the Center on Budget and Policy Priorities. "As the saying goes, a billion here, a billion there and soon you're talking about real money."

The Affordable Care Act requires employers with more than 50 full-time employees to provide health benefits or pay a penalty. The law defines full-time work as more than 30 hours per week.

Business groups, which have urged that full-time work be defined as 40 hours a week, say the lower threshold has encouraged employers to reduce workers' hours. That argument has been bolstered by anecdotes from around the country (though government statistics show no major shift to part-time work in recent years).

"Restoring the 40-hour work week would benefit retail employees with more income and encourage more full-time employment," the National Retail Federation said in a recent letter to House leaders.

A bill to change the requirement to 40 hours passed the House 252-172, with 12 Democrats joining Republicans to back the measure. But its prospects in the Senate are less clear.

The nonpartisan Congressional Budget Office concluded that raising the threshold would increase the federal deficit by more than $50 billion over the next decade. The bill would also lead to 1 million fewer people getting health benefits at work, and would increase the number of uninsured Americans receiving government insurance.

"House Republicans just simply refuse to accept that Obamacare, the Affordable Care Act, is working for millions of Americans and reducing the number of Americans left vulnerable without quality health insurance," Cardin, the top-ranking Democrat on the Senate Small Business and Entrepreneurship Committee, said in a statement.

"I am open to finding ways to make it easier for small businesses to navigate the Affordable Care Act and expand their ability to provide quality health care for their employees, but we've got to do it in a way that strengthens our overall health care system," he said.

Tribune Newspapers Washington bureau contributed to this article.

john.fritze@baltsun.com

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