Originally appeared in Jacobin on Jan. 2, 2020.
Photo by Lenore Edman (via Flickr)
On December 20, 2019, the medical device industry — the folks who make everything from surgical gloves to prosthetic legs — breathed a sigh of relief. It was on that day that President Trump signed into law a spending package that, among other things, permanently repealed the medical device tax included in the original Affordable Care Act legislation. (It had been suspended since 2016, but was set to go back into effect.)
The 2.3 percent excise tax had become a source of ire for the industry, which had complained about its profits being sucked away to pay for the government’s health care overhaul.
“This is a great day for American patients, American jobs and American innovation: The medical device tax is officially history. With the end of this burdensome tax, the US medtech industry can do what it does better than anyone else in the world: develop life-changing innovations that save and improve patients’ lives, and create high-paying, high-tech jobs to keep the American economy booming,” Scott Whitaker, president and CEO of the Advanced medical Technology Association, said. “We thank President Trump and his administration for their strong support of medical innovation and for their leadership as we worked with Congress to repeal this onerous tax.”
One of the industry’s strongest allies in Congress during this multi-year legislative fight to repeal the tax was Sen. Elizabeth Warren. During her initial campaign for Senate, Warren went to bat for medical device companies, many of which are headquartered in her state of Massachusetts.
“Even Elizabeth Warren, the Democratic Senate candidate from Massachusetts and a staunch progressive, has now come out in favor of repeal,” boasted former Indiana Democratic Senator Evan Bayh, in a September 2012 Wall Street Journal op-ed advocating for the medical device companies his lobbying firm McGuireWoods represented. That year, Warren even wrote an op-ed for an industry publication, MassDevice, touting her support for repealing the tax.
In 2015, Warren introduced legislation that would penalize drug companies that break the law and force them to invest in research to compensate Americans. But the bill included a loophole that exempted medical device companies, something Time Magazine’s Massimo Calabresi caught. The industry didn’t mind.
“We’ve enjoyed the opportunity to work with Sen. Warren during her tenure in Congress,” JC Scott, who served as the head of government affairs for AdvaMed, the industry’s main lobbying association, told Time.
Warren went on to work with fellow Massachusetts Democrat Ed Markey in introducing legislation, called the “No Taxation on Device Innovation Act,” that would repeal the tax and repeal certain tax subsidies for fossil fuel companies to make up the difference (the latter have very little presence in their state as opposed to the medical device industry).
In a statement touting the legislation, Warren said that it was time “to repeal the medical device tax with an appropriate offset so Massachusetts device companies can continue to innovate and save lives.” (The liberal think tank, the Center for Budget and Policy Priorities, found the industry-backed arguments against the tax to be unpersuasive.)
Former New York Times reporter Elisabeth Rosenthal, an expert on health care issues, described the dynamic by which medical device companies managed to persuade some of the country’s most liberal senators to take up their cause in her 2017 book An American Sickness, which chronicled the health care industry’s malfeasance:
Device manufacturers are a tight-knit oligopoly with nearly absolute control of distribution. There are dozens of large drugmakers and hundreds of small ones . . . Medtronic is the primary supplier of insulin pumps — with St Jude Medical and Boston Scientific — also of implantable defibrillators. These three behemoths are based in Minnesota and Massachusetts, which is likely why Al Franken, Amy Klobuchar, and Elizabeth Warren, some of our most liberal senators, have all “worked across the aisle” with Republicans to support repeal of the medical device excise tax.
It should be noted that the recent repeal of the tax was not matched with any reduction in tax subsidies for fossil fuel companies. That didn’t stop Markey from taking a victory lap.
“The repeal of the medical device tax is good news for Massachusetts’s robust medical device industry and innovation economy,” Markey said, noting that he and Warren had introduced legislation to kill the tax in 2018. (Warren was not present to take a vote either way on the final spending bill.)
Warren appears to have not put out any similar statement, despite making the death of the tax a cause of hers since 2012. Perhaps she doesn’t want to draw attention to the reality that she advocated for a powerful corporate interest in her home state at the same time she is taking aim at other candidates for “wine cave” fundraisers and being overly close with corporate America.
Many progressives have found Warren’s ever-changing positions on health care this year to be a sign that she is not committed to establishing a single-payer, universal health care system which enrolls all Americans into Medicare. After all, she started the year portraying health care reform as a matter of picking one of many options.
“There are multiple bills on the floor…I’ve signed onto Medicare for All. I’ve signed onto another one that gives an option for buying into Medicaid,” she told a Bloomberg News interviewer in an interview in January 2019, after she had started her presidential bid. Over time, she came to adopt the position of Bernie Sanders, telling debate audiences, “I’m with Bernie.”
She then pivoted to breaking his bill into two parts, the first essentially a public option, and the second a promise to get to full Medicare for All by passing a second health care bill after the midterm elections in 2022.
Unlike Sanders, who has been a single-payer advocate virtually his entire life, Warren was actively campaigning against single-payer health care as late as 2012.
But perhaps the most telling story about Warren and health care is the reality that even a tiny 2.3 percent tax was too much for the senator to bear, if it happened to fall on constituents of hers who worked in a prosperous, monopolistic industry that happened to have a heavy presence in her state.
As president, Warren wouldn’t have to worry just about one industry putting pressure on her in one state, but every health care industry. In order to pass Medicare for All or any legislation that comes close to it in ambition, the next president will have to face off with potentially hundreds of millions of dollars spent on lobbying, campaign donations, attack ads, fearmongering mailers and radio segments, think tank subsidies, and the other tools that corporate America has used for so many years to game the legislative process.
If Senator Warren could not persist in the face of one home-state industry, could she persist against the collective might of all of America’s health care industries?