By Gary Price, CEO, Dental Trade Alliance
In 2009, Washington D.C. turned its focus on the medical device and the dental industry. At the urging of the new Obama administration, lawmakers on both sides of Capitol Hill took up the debate of legislating changes to the current U.S. health care system. Originally, the goal was to get a handle on health care costs, make health care available to millions of Americans without health care coverage, and streamline insurance procedures.
Oral health care had managed to usually fly underneath government radar. In 2009 the glaring lights of government regulators and policy makers shone directly on the oral health care industry. Senators and Congressmen were targeting our industry as they looked for revenue enhancements to help pay for a future health care bill. Here is an overview of what was proposed in 2009, and its possible affect on the oral health care industry.
After much posturing and lobbying by various groups with a stake in health care, the U.S. House of Representatives passed the Affordable Health Care for America Act (H.R. 3962) in the fall of 2009. Particular provisions of this bill included a tax of 2.5% on the sale of all medical devices, including dental devices. (Note: all dental devices are regulated as medical devices.) Essentially, all medical devices sold in the U.S. to an end user (dentists, doctors, hospitals) would include a 2.5% tax that would increase the cost of all medical and dental devices. Presumably these added costs would be passed on to consumers, patients, and taxpayers. The Dental Trade Alliance (DTA) is on the record as opposing any new taxes or industry-related fees.
The bill also recommended that one year after H.R. 3962 has been enacted, the Secretary of Health and Human Services should prepare a report for Congress and make a recommendation regarding possible expansion (along with specific costs) of oral health care for adults. Adding oral health care would be an amendment to any existing health care reform law.
H.R. 3962 also provides for oral health experts to be part of any panel that oversees the Health Benefits Exchange. This is the group charged with ensuring there is a government/private option for U.S. citizens that are not eligible for standard private health insurance.
In late December, the U.S. Senate passed the Patient Protection and Affordable Care Act. The Senate bill (H.R. 3590) differs from the House of Representatives bill in several ways. It does not deem oral health care experts to be part of the panel on the Health Benefits Exchange. The Senate bill offers funding to train more oral health care professionals in the U.S. and to provide training for mid-level oral care providers (presumably, health-care professionals including those not fully trained and licensed as dentists).
The Senate bill offers a very different fee structure for collecting taxes on medical devices in the Patient Protection and Affordable Care Act. Unlike the House of Representatives bill with a set tax of 2.5% on all medical device sales, the Senate version plans to collect $20 billion annually. Medical device manufacturers will report their gross sales at the end of each calendar year. These manufacturers will be taxed on their portion of sales (not a fixed amount or a fixed percentage, and when combined with other manufacturers), to total $20 billion in tax revenue. Manufacturers that sell less than $5 million annually will be exempt. Manufacturers that sell more than $5 million annually but less than $25 million annually will pay half the taxes of those manufacturers that exceed $25 million in annual sales. There is also a $2 billion to $3 billion excise tax on branded pharmaceuticals that impacts the oral health care industry.
The Senate bill also has provisions for grants to combat caries. Also written into the bill are additional oral health prevention programs for school age children. The goal is to offer low cost preventive oral health care programs for American children in the form of studies that can be measured for success, before initiating these programs nationwide.
As of mid-January 2010, there has been no final bill sent to President Obama to be signed into law. Congress is now required to work out details between the two bills passed separately by the U.S. House of Representatives and the Senate. This means many of the provisions relating to the medical device industry and the oral health care industry may change or have to be renegotiated. It is difficult to speculate on the language in the final bill that will be submitted to the president. Lobbying and negotiations continue unabated. Even after passage of any final bill, we can expect changes predicated on costs and the ability to manage the provisions in any new laws.
DTA will continue to monitor all health care-related legislation in Washington and report back to the industry any progress that is recorded. DTA will also recommend Congress forgo any fees or taxes levied on the medical device industry. More updates will follow, including a DTA-sponsored program at the Yankee Dental Congress on Jan. 28 at the Boston Convention Center, Room 211, at 8 a.m. DTA legislative consultant Don Lavanty, president of J.T. Rutherford and the Federal Group, will provide a formal update on health care legislation for the oral health care industry. To attend, please e-mail your name and contact information to [email protected].
By Gary Price, CEO, Dental Trade Alliance