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Boustany Opening Statement: Hearing on the Impact of Limitations on the Use of Tax-Advantaged Accounts for the Purchase of Over-the-Counter Medication

April 25, 2012

Welcome to this afternoon’s hearing on the limitations the Democrats’ health care law places on consumers’ use of tax-advantaged plans to purchase over-the-counter medication.

Millions of Americans use tax-advantaged plans to save for medical expenses. Plans such as flexible spending arrangements, health reimbursement arrangements, and health savings accounts allow consumers to set aside funds for out-of-pocket health care expenses such as deductibles, copayments, and, until recently, over-the-counter products not typically covered by insurance. Contributions to and distributions from these plans are generally tax-exempt and make health care more affordable to well over 40 million families.

Until 2011, families with tax-advantaged plans could use these funds to purchase over-the-counter medication such as allergy medication, cold and flu remedies, and first aid products without a doctor’s prescription.

However, to pay for the massive entitlement expansion in the President’s health care law, the new law 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.

As a result, millions of Americans now first have to visit a physician’s office before going to a drug store to purchase cold medicine with their FSAs, for example. This leads to increased wait times in doctors’ offices, greater costs both in time and dollars for consumers, and delays in obtaining treatment.  This policy was not enacted to cure a problem or promote better health care spending – this was done to raise revenue, pure and simple.

When the new law was first enacted, the American Medical Association wrote that the limitations would “increase costs to the healthcare system, generate unnecessary physician office visits, and place a new administrative burden” on doctors.  A Wall Street Journal article from last year quoted one pediatrician as saying, “I am now doing the IRS’s work, and that’s what I resent most.”

This afternoon’s hearing is not designed to be a broad debate about the 2010 health care law, instead it is to examine one provision of the new health care law and hear from our witnesses how it is affecting consumers, physicians, and job creators in the health care sector.

With that, I would like to welcome our witnesses here today, and I look forward to a fruitful discussion on this important topic.