The House Ways and Means Oversight Subcommittee on April 25 considered a $5-billion provision (Sec. 9003) in the Patient Protection and Affordable Care Act (ACA) that prohibits using certain tax-favored spending plans to reimburse taxpayers for the cost of over-the-counter (OTC) medicines. GOP lawmakers said requiring taxpayers to visit a doctor is tantamount to a tax increase that would clog physicians' offices, thereby reducing health care access for millions of American families. The provision prohibiting the tax-favored plans from reimbursing expenses for over-the-counter drugs, which was intended to improve tax compliance and reform tax expenditures, was first suggested by the Joint Committee on Taxation in 2005, Democrats on the subcommittee countered. The ACA provision took effect on January 1, 2011.
Rep. Charles Boustany (R-LA) said, in his opening statement, that the ACA "required that consumers using tax-advantaged plans must first obtain a doctor's prescription in order to use their tax-preferred account funds to purchase over-the-counter medication. This provision alone is a $5 billion tax increase on the American people."
Scott Melville, president of the Consumer Healthcare Products Association, a trade group representing the makers of over-the-counter medicines and dietary supplements, testified that using flexible spending arrangements and health savings accounts to pay for OTC medicines could eliminate about 20-million office visits each year and save about $5 billion in health care costs. Melville said there is no medical justification for requiring an office visit before buying OTC medicines with a spending plan.
However, Paul N. Van De Water, a senior fellow of the Center on Budget and Policy Priorities, a research group that examines policy and public programs that affect low- and moderate-income families and individuals, said the use of tax-advantaged accounts encourages the overconsumption of health care. The accounts make taxpayers less price-sensitive and reduce the effects of the cost-sharing requirement in controlling utilization, he testified.
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