The ACA is going to die: Why is medtech so quiet?

Some major medical device industry lobbying groups are staying mum for now about the expected repeal of the U.S. Affordable Care Act—even though an extensive overhaul of the national healthcare system would have a serious impact on medtech.

With so much unpredictability around how the incoming Trump administration and the new Republican Congress will replace the ACA, the industry’s representatives have been taking more of a wait and see approach.

“Keep your powder dry,” Greg Crist, executive vice president of public affairs at AdvaMed, says of the approach. AdvaMed, for now, has a laser-like focus on quickly achieving a major policy goal: permanent repeal of the 2.3% medical device excise tax that was part of the ACA.

“It enjoys overwhelming bipartisan support and bicameral support. That is really unusual in Washington. So let’s do it,” Crist said. “How much stronger would this industry be as well as the association having a win like that under our belt, the wind behind our back?”

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Permanent repeal of the device tax seems doable while wading into the ACA debate seems tricky because it is presently unclear what kind of healthcare system Republicans want to replace the ACA with. President-elect Donald Trump, for example, promised during the presidential campaign to keep Medicare and Medicaid intact, but U.S. Rep. Tom Price, Trump’s nominee for secretary of Health and Human Services, had advocated cutting funding on the programs in the past, according to PolitiFact. (Obamacare expanded Medicaid funding.)

“It’s just a fluid situation, so it’s very hard to nail down a statement,” said Andrew Northup, director for global affairs at the Medical Imaging & Technology Alliance.

One issue Northrup was quite willing to be outspoken about, however, was trade—given some of the strong words Trump had to say during the campaign about U.S. trade deals with Mexico and other countries.

Pressures to bring manufacturing back to the United States could especially be a material burden on medical device companies, nearly all of which rely on low-cost manufacturing outside the country (including in Mexico), S&P Global Ratings said in a post-election report. That is especially true for imaging equipment makers, though Northrup noted that the more labor- and skill-intensive work has stayed in the U.S.

Jack up tariffs with Mexico, and Northrup thinks the situation would be dire for the medical imaging equipment industry: “Costs would go up. Profits would go down. R&D would go down You might gain a few jobs in the U.S., but overall you’d lose a lot more.”

Living in interesting times

“I don’t think that there has been a scenario, not since I’ve been a professional and in politics, where we really know so little about exactly what the key priorities are that are going to impact our industry,” Shaye Mandle, president and CEO of the Medical Alley Association in Minnesota, said of the incoming administration.

MassMEDIC President Tom Sommer usually flies his board to D.C. for meetings in February; he’s waiting until March this year. “That’s when we know there will be more to consider and more information.”

Crist acknowledges that the situation is unpredictable: “There’s a new normal. There’s a new bar in the way this administration approaches public policy and lawmaking. And no one knows how to calibrate that right now.”

When the debate over replacing the ACA does take shape, Crist thinks some general things AdvaMed will push for include patient access, making sure the medical device industry has a seat at the table, and educating on the concept of value not just at the point of care but over the long-term. (A crucial component of Obamacare involved shifting Medicare away from fee-for-service and toward “value-based” payments that reward health providers for improving the overall quality of care and efficiency.)

Mandle is hoping for stability. He says most industry insiders would gladly say that they would not like to see the U.S. government rewiring the healthcare system every five years.

“I think we’d like to see stability more than anything else. And for us, the most important thing is that Americans who need access to the technologies can get them,” Mandle said.

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