[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




 
                  IMPACT OF LIMITATIONS ON THE USE OF
                    TAX-ADVANTAGED ACCOUNTS FOR THE
                PURCHASE OF OVER-THE-COUNTER MEDICATION

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 25, 2012

                               __________

                          Serial No. 112-OS11

                               __________

         Printed for the use of the Committee on Ways and Means



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                      COMMITTEE ON WAYS AND MEANS

                     DAVE CAMP, Michigan, Chairman

WALLY HERGER, California             SANDER M. LEVIN, Michigan
SAM JOHNSON, Texas                   CHARLES B. RANGEL, New York
KEVIN BRADY, Texas                   FORTNEY PETE STARK, California
PAUL RYAN, Wisconsin                 JIM McDERMOTT, Washington
DEVIN NUNES, California              JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
GEOFF DAVIS, Kentucky                XAVIER BECERRA, California
DAVID G. REICHERT, Washington        LLOYD DOGGETT, Texas
CHARLES W. BOUSTANY, Jr., Louisiana  MIKE THOMPSON, California
PETER J. ROSKAM, Illinois            JOHN B. LARSON, Connecticut
JIM GERLACH, Pennsylvania            EARL BLUMENAUER, Oregon
TOM PRICE, Georgia                   RON KIND, Wisconsin
VERN BUCHANAN, Florida               BILL PASCRELL, Jr., New Jersey
ADRIAN SMITH, Nebraska               SHELLEY BERKLEY, Nevada
AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas
ERIK PAULSEN, Minnesota
KENNY MARCHANT, Texas
RICK BERG, North Dakota
DIANE BLACK, Tennessee
TOM REED, New York

                   Jennifer Safavian, Staff Director

                  Janice Mays, Minority Chief Counsel

                                 ______

                       SUBCOMMITTEE ON OVERSIGHT

             CHARLES W. BOUSTANY, Jr., Louisiana, Chairman

DIANE BLACK, Tennessee               JOHN LEWIS, Georgia
AARON SCHOCK, Illinois               XAVIER BECERRA, California
LYNN JENKINS, Kansas                 RON KIND, Wisconsin
KENNY MARCHANT, Texas                JIM McDERMOTT, Washington
TOM REED, New York
ERIK PAULSEN, Minnesota


                            C O N T E N T S

                               __________
                                                                   Page

Advisory of April 25, 2012, announcing the hearing...............     2

                               WITNESSES

Mr. Scott M. Melville, President and Chief Executive Officer, 
  Consumer Healthcare Products Association, testimony............     5
Dr. Joel M. Feder, D.O., F.A.C.O.F.P., Captain MC, USN (Ret.), 
  American Osteopathic Association, testimony....................    20
Mr. Steven Taylor, Chief Executive Officer, Sjogren's Syndrome 
  Foundation, testimony..........................................    27
Ms. Jennifer Hatcher, Senior Vice President, Government & Public 
  Affairs, Food Marketing Institute, testimony...................    34
Mr. Paul N. Van de Water, Senior Fellow, Center on Budget and 
  Policy Priorities, testimony...................................    40
The Hon. Lynn Jenkins............................................    51
The Hon. Erik Paulsen............................................    58

                       SUBMISSIONS FOR THE RECORD

The Hon. Wally Herger............................................    64
The Hon. Dave Reichert...........................................    66
American Medical Association.....................................    68
Center for Fiscal Equity.........................................    72
Henderson Brothers...............................................    75
Infinisource.....................................................    76
National Business Group on Health................................    81


                    IMPACT OF LIMITATIONS ON THE USE
                     OF TAX-ADVANTAGED ACCOUNTS FOR
              THE PURCHASE OF OVER-THE-COUNTER MEDICATION

                              ----------                              


                       WEDNESDAY, APRIL 25, 2012

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                 Subcommittee on Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:30 p.m., in 
Room 11002, Longworth House Office Building, the Honorable 
Charles Boustany [chairman of the subcommittee] presiding.
    [The advisory of the hearing follows:]

HEARING ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

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

Wednesday, April 25, 2012

    Congressman Charles W. Boustany, Jr., MD, (R-LA), Chairman of the 
Subcommittee on Oversight of the Committee on Ways and Means, today 
announced the Subcommittee will hold a hearing on limitations on the 
purchase of over-the-counter (``OTC'') medication with tax-advantaged 
accounts such as health care Flexible Spending Arrangements (``FSAs''), 
Health Savings Accounts (``HSAs'') and Health Reimbursement Accounts 
(``HRAs''). The hearing will take place on Wednesday, April 25, 2012, 
in Room 1100 of the Longworth House Office Building, beginning at 2:30 
P.M.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing. A list of invited 
witnesses will follow.
      

BACKGROUND:

      
    Millions of Americans currently use tax-advantaged accounts to save 
for medical expenses defined as ``qualified'' by the Internal Revenue 
Code (IRC). Contributions to and distributions from these accounts are 
generally tax-exempt and may be used for unreimbursed medical expenses 
such as deductibles and co-payments. Approximately 33 million Americans 
are in families with FSAs, which are offered by 29 percent of small 
businesses and 85 percent of large employers. An additional 11.4 
million Americans are enrolled in an HSA.
      
    Until 2011, these account holders could use their tax-free savings 
to purchase OTC medication without a prescription. Recent changes to 
the Tax Code modified the definition of qualified medical expenses, 
generally prohibiting Americans from using their FSA, HSA or HRA funds 
for medication not prescribed by a health care provider. As a result, 
Americans must now purchase non-prescribed OTC medications with after-
tax dollars, resulting in a tax increase on American families.
      
    Physician groups have suggested that the OTC medication 
prescription requirement has imposed an unreasonable administrative 
burden, resulted in longer waits for appointments, and increased health 
care costs. The Subcommittee's hearing will examine how these changes 
have specifically affected patients, consumers, physicians, and health 
care costs and spending.
      
    In announcing the hearing, Chairman Boustany said, ``Too often in 
Washington, officials make decisions about health care policy based on 
abstract theories and budgetary scores. This hearing will focus on how 
one decision in particular--the limitation on how consumers may use 
their own FSA, HSA or HRA money--has adversely affected access and 
affordability for families, physicians, and job creators.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on reviewing the rules affecting FSAs, HSAs 
and HRAs and the impact the rules have on consumers, physicians, and 
employers.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word 
document, in compliance with the formatting requirements listed below, 
by the close of business on Tuesday, May 9 2012. Finally, please note 
that due to the change in House mail policy, the U.S. Capitol Police 
will refuse sealed-package deliveries to all House Office Buildings. 
For questions, or if you encounter technical problems, please call 
(202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word format and MUST NOT exceed a total of 10 pages, including 
attachments. Witnesses and submitters are advised that the Committee 
relies on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov/.

                                 

    Chairman BOUSTANY. The subcommittee will come to order. I 
would like to welcome everyone to this afternoon's hearing on 
the limitations of the Democrats' health care law that 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 expense. Plans such as flexible spending arrangements, 
health reimbursement arrangements, health savings accounts 
allow consumers to set aside funds for out-of-pocket health 
care expenses such as deductibles, co-payments, 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 medications such as 
allergy medication, cold and flu remedies, 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 
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 drugstore to purchase 
cold medicine with their FSAs, for example. This leads to 
increased wait times in doctors' offices, greater cost both in 
time and dollars for consumers and potential delay in obtaining 
treatment. This policy was not enacted to cure a problem or to 
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, I quote, increase 
cost to the health care system, generate unnecessary physician 
office visits and place a new administrative burden on doctors, 
end quote. A Wall Street Journal article from last year quoted 
one pediatrician as saying, and I quote, I am now doing the 
IRS's work and that is what I resent most, end quote.
    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 in the new health care law and hear from our 
witnesses how this is affecting consumers, physicians, job 
creators in the health care sector.
    And with that I want to welcome our witnesses here today, 
and I look forward to a fruitful discussion on this very 
important topic. Ranking Member Lewis has been detained. He 
should be here shortly. But I will now yield to my friend Mr. 
Becerra from California for the purposes of an opening 
statement.
    Mr. BECERRA. Thank you, Mr. Chairman, for holding this 
hearing today. Health care is an important topic that touches 
the lives of millions of Americans. The Affordable Care Act 
will expand comprehensive health insurance coverage to over 30 
million Americans and has already insured millions of young 
adults and people with preexisting conditions. It contains 
important insurance reforms that will benefit both those who 
are insured today and those who are not insured.
    The Affordable Care Act will reduce the deficit by over 
$120 billion over 10 years and over $1 trillion over 20. The 
Act did not add to the deficit and was fully paid for by a 
number of provisions. One of those provisions is before us 
today, a provision that affects the tax treatment of 
reimbursements for over-the-counter medicines from certain tax-
favored accounts.
    The provision before us today raised about $5 billion. This 
provision was initially suggested in a 2005 report from the 
Joint Committee on Taxation as an option to improve tax 
compliance. The new rule states that over-the-counter 
medications may no longer be reimbursed from flex spending 
accounts, health savings accounts or health reimbursement 
accounts without a prescription from a physician.
    I look forward to hearing from the witnesses today. I would 
like to learn more about how the new rule is affecting 
taxpayers and the health care system and how any changes to 
this provision would interface with the notion and desire for 
tax reform. Many people, including some on this committee, have 
said that we should eliminate all tax expenditure programs, 
which are those specialty programs that affect only certain 
populations within the Tax Code, and this would fall within the 
category of one of those tax expenditure programs. And I would 
be very interested to see what the witnesses have to say about 
that.
    So, Mr. Chairman, I thank the witnesses in advance for 
their testimony and their willingness to share their 
experiences. And with that, I yield back the balance of my 
time.
    Chairman BOUSTANY. I thank the gentleman from California. 
And let me just say that I ask unanimous consent that all 
members' written statements be included in the record. Without 
objection it is so ordered. And when Mr. Lewis gets here I will 
also allow him out of courtesy to give an opening statement 
since he is ranking member of this subcommittee.
    I want to thank our witnesses for being here this 
afternoon. We will hear from Scott Melville, President of the 
Consumer Health Care Products Association. Mr. Melville, 
welcome. We have Dr. Joel Feder, a member of the American 
Osteopathic Association. Welcome, sir. Steven Taylor of the 
Sjogren's Syndrome Foundation. Mr. Taylor, welcome. Jennifer 
Hatcher, who is Senior Vice President of the Food Marketing 
Institute. Ms. Hatcher, welcome. And Peter Van de Water, Senior 
Fellow of the Center on Budget and Policy Priorities. Welcome. 
I want to thank you all for being here today. You will each 
have 5 minutes to give your statements for the record, but your 
full written statements will be included in the record of this 
hearing.
    Mr. Melville, we will begin with you. You have 5 minutes.

 STATEMENT OF SCOTT M. MELVILLE, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, CONSUMER HEALTHCARE PRODUCTS ASSOCIATION, Washington, 
                              D.C.

    Mr. MELVILLE. Thank you, Chairman Boustany, Ranking Member 
Lewis, other Members of the Subcommittee. Thank you for holding 
this hearing and inviting me to testify on behalf of the 
Consumer Health Care Products Association, the national 
association representing manufacturers and distributors of 
over-the-counter medicines and dietary supplements.
    OTC medicines are a vital part of our Nation's health care 
system and often serve as a first line of treatment for many 
common self-manageable conditions like colds, allergies, 
heartburn and headaches. OTC medicines are like prescription 
medicine pharmaceuticals regulated by the Food and Drug 
Administration. However, OTCs can be purchased by consumers 
without a prescription because the FDA has determined that the 
medicine can be safely used by a consumer without the 
intervention of a doctor or other health care professional.
    This broad availability of OTC medicines 24/7 in a wide 
range of retail outlets, including pharmacies, provides 
tremendous benefit to both consumers and our health care 
system. In fact, a recent study by Booz & Company estimated 
that OTCs provide $102 billion in benefits to our Nation's 
health care system every year. These benefits are realized 
first through reduced doctor visits accounting for 
approximately $77 billion of those savings; and, two, reduced 
drug costs relative to prescription products accounting for $25 
billion. Consumers, public and private payers and the economy 
all benefit. The authors concluded that each dollar spent on 
OTC medicine saves the Nation's health care system $6 to $7.
    Access to OTC medicines empowers consumers and allows them 
to take greater control over their health care and their health 
care spending. So do flexible spending arrangements, or FSAs, 
which were designed to help Americans afford the portions of 
health care costs not covered by insurance. In 2003 the 
Internal Revenue Service first authorized the use of FSAs for 
the purchase of OTC medicines, confirming their equal status 
with prescription pharmaceuticals for purposes of FSA 
eligibility. In subsequent years millions of consumers budgeted 
for their health care, set aside pretax money and utilized FSA 
continuance to purchase OTC medicines. Retailers made it a 
seamless transaction by identifying eligible products and 
processing the payment electronically through the consumer's 
FSA accounts.
    Unfortunately, for consumers and the health care system 
that efficient process ended on January 1, 2011. That is when a 
provision in the Affordable Care Act took effect that requires 
consumers to seek a prescription for a medicine that doesn't 
require one if they want to utilize their FSAs to purchase an 
OTC medicine. There is no medical or regulatory justification 
for this. It is simply a legal requirement under the new law if 
they want to use their tax-advantaged FSA.
    This leaves consumers with three options. One, to seek an 
unnecessary doctor's appointment to get a prescription and then 
submit the purchase for reimbursement under their FSA account. 
Two, to purchase the OTC medicine out of their own pocket which 
will raise the cost of the product to the consumer between 10 
or 35 percent depending on their individual tax bracket. Or 
three, go without treatment. None of these options we would 
suggest are good health care policy, none of these options 
increase health care access, but they do increase cost to 
consumers and to our health care system.
    According to the Employers Council on Flexible 
Compensation, the average FSA participant earned approximately 
$55,000 per year and contributed around $1,400 to their FSA in 
2008, the latest data that we were able to access. Clearly FSA 
accounts benefit a broad cross-section of America. And a recent 
Neilsen study found that of 19 American households that 
participated in a FSA program roughly half of them used their 
FSAs to purchase OTC medicines before the treatment was 
changed.
    Now, our industry is not alone in advocating for 
restoration of eligibility of OTCs under FSA accounts, and we 
are pleased there is a growing bipartisan support in Congress 
to do just that. CHPA is one of the founding members of the 
Health Choices Coalition, which includes physicians, patient 
groups and retailers that is dedicated to restoring OTCs to 
tax-preferred status. The coalition supports legislation 
sponsored by Representative Lynn Jenkins and Shelley Berkley 
and also Representative Diane Black, and also supports bills 
sponsored by Representative Erik Paulsen and co-sponsored by 
you, Chairman Boustany, and Representative Aaron Schock as 
well. We thank these members for leading the fight. If we are 
not successful, this unnecessary policy will continue to cost 
Americans time, money and needless suffering.
    Mr. Chairman, thank you again for allowing me the 
opportunity to testify before this subcommittee, and I will be 
happy to answer any questions you may have.
    [The prepared statement of Mr. Melville follows:]

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    Chairman BOUSTANY. Thank you, Mr. Melville. Dr. Feder, you 
may proceed.

STATEMENT OF DR. JOEL M. FEDER, D.O., F.A.C.O.F.P., CAPTAIN MC, 
USN (RET.), AMERICAN OSTEOPATHIC ASSOCIATION, OVERLAND PARK, KS

    Dr. FEDER. Chairman Boustany, Ranking Member Lewis, 
Representative Jenkins and Members of the Subcommittee, thank 
you for the opportunity to testify before you today.
    As an osteopathic physician board certified in family 
medicine, I have treated patients for 36 years. The osteopathic 
profession has a strong and distinguished history of educating, 
training and placing physicians in underserved communities. 
Today over 60 percent of all osteopathic positions practice in 
a primary care specialty.
    Over the years I have witnessed efforts to enhance access 
to quality health care and promote patient centered care. Today 
I share with you my personal experience of how the new 
restrictions placed on consumers choosing to use their tax-
advantaged account to purchase over-the-counter medications has 
affected my practice and my patients.
    As a physician my paramount concern is developing and 
preserving a strong relationship with my patients. I along with 
my colleagues strive to empower patients to make decisions 
regarding their health while still coordinating their care. In 
doing so, I aim to put practices into place that allow them to 
stay out of the office as a result of good health.
    In my experience with this new requirement the majority of 
the patients that request a prescription for an OTC medication 
are doing so to address a simple cold or allergy. However, this 
still requires an appointment slot normally allocated for other 
patient needs. As a result my time available to treat patients 
with more serious health care needs has reduced significantly. 
On average I see about 25 patients per day, spending 15 to 20 
minutes with each patient, 90 percent of whom visit my office 
for traditional care ranging across a wide array of health care 
needs, plus 10 percent who are simply requesting a prescription 
for OTC medication and in some instances numerous medications.
    My practice is a relatively small practice with five 
providers, including four physicians and one advanced 
registered nurse practitioner. We have an administrative staff 
of 10 working in the office who are extremely busy processing 
paperwork to keep the office running and filing claims for the 
patient care my partners and I provide. The additional task of 
processing requests for appointments for OTC prescriptions is 
an unnecessary burden. This new burden is in addition to the 
further demands on physician practices, including the adoption 
of electronic health records and electronic prescribing 
systems, preparation for coding under ICD-10, implementation of 
quality measures and adjusting to other changes in the health 
care delivery system. These additional policies and procedures 
are important; however, each new requirement can be quite 
costly to small physician practices.
    As you know, physicians work hard to establish a trusting 
relationship with their patients. Generally patients choose to 
see their physician when they truly believe they need care. And 
my experience is most patients feel inconvenienced and unhappy 
with a new prescription requirement and enter my office with 
that mindset. As a result, I am potentially placed in a 
difficult and uncomfortable situation with a patient by 
possibly refusing to provide a prescription, charging for that 
service and/or recommending the patient purchase a different 
higher cost alternative. For instance, I do not agree with the 
practice of using OTC medicines as a source of renewed energy. 
A patient might then seek to choose another physician who is 
willing to write their prescription, which further fragments 
the important physician-patient relationship.
    We must remember that the FDA has already deemed these 
products safe and appropriate for direct over-the-counter sale 
to consumers, yet after writing the prescription physicians may 
be subject to new liability for any potential interactions they 
might have with other over-the-counter medications my patient 
has taken which the patient may or may not be willing to 
disclose.
    In closing, restricting consumers who choose to use their 
tax-advantaged account to purchase OTC medications by requiring 
them to obtain a prescription from their physician is 
unnecessary and disruptive to efficient care delivery. This 
restriction creates an unnecessary burden upon me as a 
physician, upon my practice and, most importantly, upon my 
patients.
    I would again like to thank you and Members of the 
Committee for affording me the opportunity to share my 
experiences and the AOA's perspective regarding this important 
topic affecting osteopathic physicians and our patients. We 
appreciate the work that you do to promote policies that 
advance patient centered quality care that is cost effective 
for the health care system. We look forward to working with you 
in the weeks and months ahead to ensure that congressional 
action fosters strengthening the physician-patient 
relationship.
    Thank you.
    [The prepared statement of Dr. Feder follows:]

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    Chairman BOUSTANY. Thank you, Dr. Feder. Mr. Taylor, you 
may proceed.

STATEMENT OF STEVEN TAYLOR, CHIEF EXECUTIVE OFFICER, SJOGREN'S 
               SYNDROME FOUNDATION, BETHESDA, MD

    Dr. TAYLOR. Good afternoon. Thank you, Chairman Boustany 
and committee members. I am Steve Taylor, and I am the Chief 
Executive Officer of the Sjogren's Syndrome Foundation, and I 
thank you for allowing us to testify.
    Sjogren's is one of the country's most prevalent autoimmune 
diseases striking as many as 4 million Americans, 90 percent of 
whom are women. Patients largely depend on the use of over-the-
counter products to treat their disease and prevent devastating 
complications. The cost is untenable for patients and their 
families and with so many products needed for treatment having 
to go to a physician for a prescription each and every time can 
present an undue burden on the patient but also on the health 
care system, the physician and the office staff.
    As with most autoimmune diseases, the immune system turns 
against one's own body. In Sjogren's the moisture producing 
glands are the primary target, this causing many complications, 
including internal organ involvement of the lungs, kidneys and 
pancreas, as well as body systems are affected, such as the 
musculoskeletal, gastrointestinal, vascular, nervous and 
reproductive systems.
    But today I wanted to elaborate on our hallmark symptoms, 
dry eye and dry mouth, since these lead to a majority of our 
patients' over-the-counter purchases. Dry eye can cause pain 
and lead to frequent eye infections and blurred vision. When 
left untreated dry eye can lead to corneal ulcers and abrasions 
as well as potential blindness. The few treatments available, 
moisture drops and ointments, are expensive.
    Dry mouth can lead to rampant cavities, chipped and cracked 
teeth and ultimately loss of teeth. A lack of saliva to protect 
the lining of the mouth, throat, tongue and digestive tract 
leads to chronic burning and pain. In addition, dry mouth can 
cause difficult swallowing and problems with digestion. Over-
the-counter medications, reflux medications, are taking 
constantly by our patients and treatments for dry mouth such as 
saliva substitutes, including gels, sprays and liquids, again 
are all very expensive.
    Today only three FDA approved prescription treatments are 
available for Sjogren's patients. Two help to increase saliva 
and one to help increase tear production. Not everyone can take 
these medications, and even for those who can they still need 
to use over-the-counter products frequently to avoid pain, 
infection and other complications. Because there are so many 
products available on the market used by Sjogren's patients we 
actually publish a directory of products, over-the-counter 
products, that are available for our patients to use so they 
can identify ones that might be helpful to treat their disease.
    What is astounding is the cost our patients have to bear 
when buying over-the-counter products. A 2007 patient survey 
found that the average Sjogren's patient spends $1,300 a year 
on over-the-counter products to treat their Sjogren's. For many 
that dollar figure is actually much higher. We solicited 
patient stories last week for this hearing and those who 
responded stated that they spend anywhere from $2,000 to $4,700 
a year on medically necessary items.
    Chris Albright of Minnesota wrote, my son and I both suffer 
from severe dry eye, which has impacted our lives immensely. 
Since 2008 we have paid over $41,000 out-of-pocket solely for 
lubricating eye drops for the two of us.
    Rachel Hagan of California wrote, I cannot tell you how 
many times I have foregone food for myself because I had to pay 
for over-the-counter treatments for the various life altering 
horrible side effects of having Sjogren's.
    Betty Moss of Georgia wrote, I spend more than $3,000 a 
year on over-the-counter medications. All of these purchases 
are necessities to just keep my life bearable and that cost 
represents 10 percent of my income.
    And Kelly Nichols, an optometrist from Texas, wrote, as a 
practitioner and clinician scientist in the dry eye area, I 
never truly appreciated the impact of Sjogren's on the quality 
of life until attending and speaking at the Sjogren's Syndrome 
Foundation's national meeting. Dr. Nichols encourages Congress 
to recognize that Sjogren's patients have many expenses, 
including over-the-counter costs, to help alleviate the 
symptoms of their horrible disease.
    The stories are the reason I am here today. While our 
foundation is working hard to increase awareness and education, 
we still have a long way to go. Many physicians still do not 
recognize or understand all of the over-the-counter medications 
that are available and needed to maintain one's health. And 
requiring a prescription only puts undue burden on the office 
and their office staff but also on the patient who already has 
enough to do to fight their chronic illness.
    In closing, the Sjogren's Syndrome Foundation is glad that 
patients with diabetes are able to include medically necessary 
OTC products for their disease in their health savings plans 
without having to obtain a prescription. But why one single 
disease? What about the other diseases for which there is a 
clear medical need? What about the million of Americans who 
suffer from Sjogren's? We need your help and recognition that 
Sjogren's patients, too, depend on OTC products to treat their 
disease and that these expenses create a major burden in their 
lives.
    We appreciate your time this afternoon for this very 
important hearing, and I will be hear for questions if you have 
any. Thank you very much.
    [The prepared statement of Mr. Taylor follows:]

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    Chairman BOUSTANY. Thank you, Mr. Taylor. Ms. Hatcher, you 
may proceed.

     STATEMENT OF JENNIFER HATCHER, SENIOR VICE PRESIDENT, 
   GOVERNMENT AND PUBLIC AFFAIRS, FOOD MARKETING INSTITUTE, 
                         ARLINGTON, VA

    Ms. HATCHER. Thank you, Mr. Chairman and Members of the 
Subcommittee. I appreciate the opportunity to testify today on 
behalf of supermarket retailers and wholesalers represented by 
FMI.
    The supermarket industry is committed to providing our 
customers with a wide range of products, including both food 
and medical products. The restrictions placed on the purchases 
of over-the-counter medical products with an FSA debit card 
beginning January 1, 2011 are a real burden for consumers and 
the retail community and they make no sense.
    I will give you a brief history of the issue from our 
perspective and our members' investments. In July 2006, the IRS 
published new guidance that required retailers to develop and 
implement an information inventory approval system, IIAS, if 
they wished to continue to be able to accept FSA debit cards 
for purchases. Under the new IRS requirements a merchant's 
point of sale system must be able to verify in realtime 
electronically that the merchandise being purchased with an FSA 
card is an eligible medical expense. A massive database of all 
eligible items had to be designed and built. Each merchant 
point of sale system had to be engineered to identify and flag 
all eligible products and decline all ineligible products 
electronically. The system also had to be able to maintain the 
data electronically to be produced in the event of an IRS 
audit. Anyone who has ever had the responsibility for an IT 
project can understand the complexity of this assignment.
    In 2007, FMI joined with a group of stakeholders to develop 
a nonprofit membership organization to build the database part 
of this project to ensure consistency across all participants. 
We did not want customer confusion where an item was determined 
to be eligible at one store and ineligible at another store 
down the street. At the time of the founding this group, known 
as the special interest group for IIAS standards, included 
about a dozen stakeholders and now its membership includes more 
than 11,000 companies.
    The guidance we had from the IRS regarding the eligibility 
of certain items was extremely limited. I believe it was only 
about one page in length. We consulted numerous attorneys and 
the IRS as often as they were willing and had dozens of 
conference calls to ensure the database was accurate and 
comprehensive. The hard work to develop the database of 
products has been successful, and each month an electronic list 
by UPC code is updated to identify eligible and ineligible 
products and a link is emailed to each participating company. 
The April electronic list included 32,182 eligible items.
    In addition to the creation of the eligible product 
database, FMI members were required to also have the merchant 
side of the system implemented by January 1, 2008 to ensure 
that the items could be downloaded and flagged and an unflagged 
item could not be purchased with an FSA card, which was the 
IRS's ultimate concern. This was a tremendous amount of work to 
accomplish in this timeframe. Customers, merchants and the IRS 
seemed to be happy with the new system. It was consistent, 
efficient, accurate and was created without a single taxpayer 
dollar.
    On March 23, 2010, this all changed. In an attempt to raise 
revenue for the health care law this provision was modified to 
say that the expenses associated with OTC drugs or medicines 
will only be considered to be eligible for reimbursement if 
they are accompanied by a prescription. OTC medical supplies 
and equipment can continue to be purchased under the existing 
IIAS system. This practical effect of this change is to require 
a $130 office visit for a prescription to purchase an $18 
package of Claritin. All of the eligible item lists for all 
merchant locations had to be updated at the busiest time of the 
year. In total, 16,000 OTC medicines had to be removed from the 
electronic eligible items list.
    Beginning January 1, 2011, the tremendous effort and 
expense that more than 11,000 companies undertook to comply 
with the original IRS requirement was negated. The associates 
in our member companies who invested so much of their time and 
resources into developing this system were obviously 
frustrated. Each of our members who responded reported to me 
more than $100,000 in expenses for the development and 
implementation of this IIAS system. In government dollars that 
may not seem like a lot, but with a 1 percent industry profit 
margin in grocery that equates to more than $10 million in 
grocery sales just to break even on that expense.
    Regardless of how you feel about PPACA, this change is 
unfair to customers and to retailers and just does not make 
sense. Bandages and contact solution remain eligible. Claritin 
and Advil require a prescription.
    FMI believes Congress should preserve affordable consumer 
access to OTC medicines through FSA accounts. We strongly 
support legislation that many of you have sponsored and 
cosponsored to make this change.
    I will be pleased to answer any questions you have.
    [The prepared statement of Ms. Hatcher follows:]

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    Chairman BOUSTANY. Thank you, Ms. Hatcher. Mr. Van de 
Water, you may proceed.

  STATEMENT OF PAUL N. VAN DE WATER, SENIOR FELLOW, CENTER ON 
         BUDGET AND POLICY PRIORITIES, WASHINGTON, D.C.

    Mr. VAN DE WATER. Mr. Chairman, Ranking Member Lewis, 
Members of the Subcommittee, I appreciate the invitation to 
appear before you this afternoon.
    The Affordable Care Act includes a number of spending 
reductions and tax increases designed to assure that expanding 
health coverage does not drive up the Federal budget deficit. 
Some of these provisions limit the use of tax-advantaged 
accounts to pay for health related expenses. These limitations 
make sense both as tax policy and as health policy, and 
repealing any of them would in my view be unwise.
    Only a minority of workers benefit from these tax-
advantaged accounts. In 2010 only 39 percent of all workers had 
any access to Federal spending accounts and only 37 percent of 
the employees offered an FSA chose to participate. Thus, as a 
result only about one worker in seven has an FSA, and an even 
smaller number of workers, rather smaller fraction of workers 
is enrolled in other tax favored accounts.
    Furthermore, people with high incomes benefit 
disproportionately from these tax-advantaged accounts because 
they are in higher tax brackets, tend to consume more health 
care, and can afford to deposit larger amounts in their 
accounts. Middle and low-income people benefit much less, if at 
all. For example, someone in the 15 percent income tax bracket 
who contributed the average of $1,420 to an FSA would save $322 
in Federal income and payroll taxes. The typical middle income 
family, however, probably contributes much less than that and 
therefore receives even smaller tax savings. Low and moderate 
income households are unlikely to receive any tax savings 
because they pay little or no income tax.
    These modest tax benefits entail relatively large 
administrative and compliance costs. Employers must manage the 
accounts themselves or hire a vendor to do so typically at a 
cost of about $60 annually per participant. In addition, 
account holders must spend hours complying with onerous 
recordkeeping requirements to assure that they are using their 
accounts only for approved items.
    FSAs and other tax-advantaged accounts also encourage the 
over consumption of health care, which runs directly counter to 
bipartisan efforts to slow the growth of systemwide health care 
costs in both public programs and the private sector.
    The accounts make people less price sensitive and reduce 
the effectiveness of cost sharing requirements and controlling 
health care utilization. Moreover, prior to the restriction on 
over-the-counter items funds in tax-advantaged accounts could 
be used to purchase nearly any health care item or service 
regardless of whether it was medically necessary, cost 
effective or of meaningful health value.
    The staff of the Joint Committee on Taxation included 
changing the definition of medical expenses for tax-advantaged 
accounts in a 2005 report, identifying options for improving 
tax compliance and reforming tax expenditures. The Joint 
Committee offered several reasons for using the same definition 
of medical care both for tax favored accounts and also for 
itemized deductions.
    First, having different definitions for different 
provisions caused similarly situated individuals to receive 
disparate tax treatment.
    Second, purchases of over-the-counter medicines and other 
items such as pain relievers, cold remedies, and sunscreen 
constitute routine personal expenses which are generally 
considered not deserving of a tax subsidy.
    Third, the Joint Committee wrote, providing a subsidy for 
over-the-counter medicines may also result in less compliance 
as it may be more difficult to distinguish products that are 
medical from those that are not.
    These reasons still apply today. I think it is important 
for us to remember, as was noted in Mr. Melville's prepared 
testimony, that flexible spending accounts and other such 
accounts were generally not available to be used at all for 
over-the-counter products prior to 2003. Thus, this provision 
that we are talking about is relatively new and as far as I can 
tell the world, the medical system, the tax system, were 
operating quite well before 2003 and the notion that the 
situation is deteriorating substantially as a result of this 
provision I think is implausible.
    Moreover, Mr. Melville's testimony notes that the average 
household spends only--using an FSA spent only $136 on OTC 
medicines in 2010. The drop-off he says was 12 percent. 
Converted into dollars that is $15. And even if all of that 
drop-off were attributable to the provision that we are talking 
about today, it is truly a de minimis amount for most people. 
And for people for whom over-the-counter expenses represent a 
large amount then I believe the exception for medical 
prescription is justified.
    Thank you very much, sir.
    [The prepared statement of Mr. Van de Water follows:]

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    Chairman BOUSTANY. Thank you, Mr. Van de Water. Before we 
proceed with questioning of the witnesses I would like to 
extend courtesy to the ranking member of this subcommittee, Mr. 
Lewis, for a statement.
    Mr. LEWIS. Thank you very much, Mr. Chairman. And Mr. 
Chairman, I want to apologize to you and to other Members of 
the Committee and to my friend and colleague Mr. Becerra for my 
getting here. I was held up downtown, but I am here.
    Mr. Chairman, thank you for holding this hearing today. I 
agree that this is an important topic for millions of 
Americans. I understand that Mr. Becerra gave an opening 
statement for the Democrats, and I thank you, sir. And I thank 
you for extending me an opportunity, Mr. Chairman, to speak. I 
also would like to thank the witnesses for their testimony I 
will read, and I am probably going to have some questions, and 
I yield back.
    Thank you.
    Chairman BOUSTANY. I thank the ranking member. And I should 
say we are glad you are here.
    Mr. LEWIS. Thank you, sir.
    Chairman BOUSTANY. We will now proceed with questions for 
the witnesses.
    Mr. Taylor, I am glad you are here today because you 
brought a different perspective to all of this. When we talk 
about over-the-counter items, medications, we are typically 
thinking of aspirin and cold medicine, but you bring to the 
table representation for a group of people who have very 
serious chronic conditions, an autoimmune condition, with very 
specific needs in the over-the-counter space which is critical 
to their health. So I want to thank you for bringing that 
perspective.
    Are there other conditions out there perhaps in the 
autoimmune world or in other areas that are similar to the 
patients with Sjogren's with similar needs? Could you comment 
on that?
    Dr. TAYLOR. Absolutely. Surely in the autoimmune disease 
field there are over 80 autoimmune diseases and some of them do 
have similar conditions and symptoms as Sjogren's, as well as 
need over-the-counter products for their disease because there 
isn't pharmacological methods available for them as well. In 
addition, diseases such as head and neck radiation patients who 
had head or neck cancer also use a lot of over-the-counter 
medicines for their dry mouth, which is a serious side effect 
from having head or neck cancer, in having the treatments as 
well. So it does extend into other areas besides autoimmune 
diseases and really does hurt the pocketbook of those patients 
and their families for sure.
    Chairman BOUSTANY. And oftentimes these are specialists who 
treat these patients, and getting in to see a specialist like a 
rheumatologist for instance is not always one of those things 
you can do on the spur of the moment or even within a week or 
two, it can be difficult to get in to get an appointment, is 
that true?
    Dr. TAYLOR. That is correct. On average it takes between 3 
and 6 months to get an appointment with a rheumatologist unless 
you go through the emergency room or you have a medical 
emergency that somehow can get an appointment in to see them. 
And rheumatologists treat all the dry mouth symptoms for 
Sjogren's. And most of the dry eye products are suggested by an 
optometrist or an ophthalmologist, but typically an 
ophthalmologist is who is following them, and they have a very 
heavy workload as well because they are doing surgery and other 
things as well. So it is very difficult for them to get into 
their physician's appointments and then also to be able to get 
a prescription every time they need to buy an over-the-counter 
product.
    Chairman BOUSTANY. I thank you for bringing that 
perspective.
    Mr. Melville, in 2009 President Obama promised not to 
support any tax increases on families earning under $250,000 a 
year. And yet looking back at all of this it seems that that is 
exactly what has happened now. The ban on over-the-counter 
purchases without a prescription is estimated to raise taxes on 
American families to the tune of about $5 billion. I think we 
heard that figure mentioned earlier. Can any of the witnesses, 
starting with you, Mr. Melville, comment on whether families 
using FSAs, HRAs, HSAs make less or more than $250,000, and 
let's talk about the impact of this tax increase on those 
families.
    Mr. MELVILLE. Sure. Thank you for the question. And as I 
mentioned in my testimony, the average income for an FSA holder 
is $55,000. And on average they set aside about $1,400 of their 
income to pay for their medical costs that weren't covered by 
reimbursement. And from that perspective we think that FSAs and 
HSAs provide the right kind of message to consumers that they 
are responsible for taking care and having skin in the game on 
their own health care and that they will spend that money 
responsibly, and particularly because it is their money, they 
are setting it aside. And as a result of the change in policy 
someone who had been doing all of the right things, budgeting 
for their own health care, seeking an OTC treatment first 
before perhaps going to see a physician and taking care of it 
and saving the health care system money, they are doing all the 
right things, and the effect of this policy is to penalize them 
by saying you can no longer use your tax-advantaged card, and 
if you want to use your FSA you have to go to a doctor and get 
a prescription for a product that doesn't require a 
prescription.
    Chairman BOUSTANY. So is this going to add cost overall, 
this requirement, to go in and get a prescription each time you 
need to get over-the-counter type medications?
    Mr. MELVILLE. It does not increase the price of the 
product, it increases the cost to the consumer, because before 
they were able to use tax-advantaged dollars to purchase these 
products, now they are using after tax dollars, and you are 
treating OTC medicines differently than other medicines, 
prescription medicines. And it really doesn't make a lot of 
health policy sense because many of these medicines that are 
now available OTC were previously available by prescription. It 
is simply that the product and the experience with the product 
was such that the FDA and the sponsor and manufacturer of the 
product were able to show that a consumer could use this 
product safely without the intervention of physicians. So 
something that was previously available only by prescription 
and you could use your FSA, if it gets switched to OTC, that 
same product, you can no longer use your FSA.
    Chairman BOUSTANY. I think we have seen that with peptic 
ulcer disease. Some of the earlier treatments required 
prescriptions and now they are over-the-counter as things have 
evolved. And the ability to get these things over-the-counter 
probably saves time for the consumer. They don't have to miss 
work to go to see a doctor and those kinds of things.
    Mr. Van de Water, did you want to make a comment.
    Mr. VAN DE WATER. Yes, Mr. Chairman. Again, based on the 
figure in Mr. Melville's testimony the average family with an 
FSA is spending about $136 a year on OTC medications. That 
means that the tax advantage to that family is on the order of 
$30 to $35 a year on it if they could use the FSA to purchase 
these over-the-counter items. With numbers like that there are 
going to be very few families for whom it would be advantageous 
to actually spend the money to go to the doctor, even with a 
modest copayment, to look for a prescription to purchase 
aspirin or a cold medicine. And for the people with very high 
over-the-counter spending, such as those whom Mr. Taylor has 
been talking about, Mr. Taylor's own organization on their 
website recommends that their members talk to their physician 
about all of the over-the-counter medications they are taking 
anyway and if these are chronic concerns the prescription could 
be obtained in the course of a regular visit.
    Chairman BOUSTANY. Dr. Feder, do you want to give a 
physician's perspective on all that?
    Dr. FEDER. This restriction on patients requiring 
prescriptions for over-the-counter drugs, it places a 
tremendous burden on the family doc. I can tell you that from 
my practice. And my colleagues will tell you the same thing. 
You know, right now patients can come in with a list of 15 or 
20 over-the-counter medicines, and if we see that some of them 
aren't appropriate to be taken together the patient reacts 
unfavorably to that. It puts the provider in a very 
uncomfortable position. Also, the patient will, in my practice, 
and I think in most practices, will have to pay for an office 
visit in terms of the copay.
    Chairman BOUSTANY. Thank you. I will now yield to Ranking 
Member Lewis for questions.
    Mr. LEWIS. Mr. Van de Water, in your written statement you 
stated that 39 percent of all workers have access to flexible 
spending accounts. About how many workers is that?
    Mr. VAN DE WATER. Well, we currently have about 142 million 
workers, so applying that percentage you get about 55 million 
with access to flexible spending accounts.
    Mr. LEWIS. Well, that is access, but not use, right?
    Mr. VAN DE WATER. Correct.
    Mr. LEWIS. So does the number of people who have access in 
total to include workers and their family members?
    Mr. VAN DE WATER. Well, we don't have good data on that. Of 
course some of the work--in some cases some of those 55 million 
workers could be in the same household as another worker 
covered by an FSA, in other cases other members of the 
household might not have access to an FSA through their own 
employment. So we can't be sure. But one would guess that it 
could be on the order of one and a half to two times the 55 
million number of workers covered.
    Mr. LEWIS. Thank you. Dr. Feder, you testified a few 
moments ago in responding to the chairman's questions that when 
people come in asking for over-the-counter prescriptions they 
place a burden on you and other physicians. What can be done to 
lessen that burden?
    Dr. FEDER. The patients, the ones that I have talked to 
about this, they are upset that they have to come in in the 
first place and ask for a prescription for an over-the-counter 
drug because of the cost of their copay or the cost of the 
visit. And so right away their mindset is somewhat 
uncooperative with my mindset. And so in order to try to smooth 
that rift over, you know, I will give them the prescription 
generally speaking unless I think it is a problem for their 
health. But the burden on the physician is I could be seeing, 
you know, some very ill patients, elderly patients that I see 
that take me lots of time to see, and instead I am spending my 
time on these patients writing prescriptions for over-the-
counter drugs.
    Mr. LEWIS. Now, most of the people that come in, are they 
sick of some symptoms or are they just--maybe they saw a TV ad 
or heard something on the radio and said this is good for me 
and I just need it, I want it, Doctor, please write this 
prescription?
    Dr. FEDER. I think there is two parts to that question, 
sir. The first part, most of the prescriptions OTC that I give 
out are for colds, they would be for allergies. For example, 
the patient in the spring involves having bad allergy symptoms 
so they need a prescription for Claritin or Allegra or Zyrtec, 
something like that. And then there are those patients who come 
in from direct consumer advertising on television and radio 
that hear about something. Let me just use the example of 
testosterone because low T has become the big key word today. 
But that is a prescription item, so that is treated 
differently. But the over-the-counter drugs--oh, and other 
conditions would be pain. They might come in to ask for a 
prescription for ibuprofen or Aleve or something like that.
    Mr. LEWIS. Thank you very much. Thank you. Mr. Chairman, I 
yield back.
    Chairman BOUSTANY. Mrs. Black, you are recognized.
    Mrs. BLACK. Thank you, Mr. Chairman. And as a health care 
professional I certainly can see a number of reasons here why 
this is not a very good idea. First of all, we have got limited 
dollars that can be spent in health care, to begin with. We 
already know that it is an area where there is a rising cost to 
both the patient, the consumer and then also to the physicians 
in liability. And so as I am sitting here listening to the 
testimony I was just writing down some of the areas where I see 
this as really being a negative rather than a positive as we 
look at trying to get a lower cost of care and also making sure 
that it is patient centered care. And so I wrote these things 
down, and I would like any one of the panelists to add to this 
or correct me in what I am seeing here as being the real 
problems with this change.
    First is the cost of the visit. We all know that with the 
limited dollars, especially in those families that only have a 
limited number of dollars to spend on their health care, that 
the cost of just going to see a physician to get that 
prescription is going to be an added cost to their already 
difficulty in paying for the cost of health care.
    Number two is something that I don't know that was really 
mentioned here, in part of my having to slip it in now, but I 
am not sure that we really mentioned about the time away from 
the workplace that someone is going to take. I know having been 
a mother and also a working professional, and if I had to go to 
the doctors every time I needed something for my children's 
cough or sniffles or whatever, it is going to be time away from 
the workplace and we will see that impacting the families in 
particular.
    Number three, there is already a physician shortage. 50 
percent of my district is rural. We are having a hard enough 
time attracting physicians. And if they are using their time to 
write prescriptions rather than seeing patients that really 
need to be seen, this is really a problem.
    Number four is the liability. And Dr. Feder, I don't know 
that I really thought about that a whole lot until you 
mentioned it because now you really can't just say, oh, I will 
just write that prescription because you have a runny nose or 
you have an allergy to a spring fever or whatever, you are 
really going to have to do a full exam. Because if you just 
write a prescription and somebody has an adverse effect it is 
going to come back on you. Liability is already high enough and 
what we are doing is we are adding on top of that where it is 
going to take your time again and also result in a possible 
liability issue.
    And then the one that I don't know that we have mentioned 
here as well is patient choice, having enough confidence that 
people can understand how to take care of some of their own 
health care needs without running to a health care 
professional. And I think that that is a sad thing that we say 
that these are drugs that have been approved by FDA to be over-
the-counter when we should be giving our patients enough 
credibility to say that they can read a box, they can 
understand an over-the-counter medication that has been 
approved by FDA.
    So I have chronicled five things here that I think are 
going to drive up the cost of care, as well not move us in the 
position of having more patient centered care and allowing 
people to be more involved in their own care. So any one of you 
all, can you add to that or do you want to correct something 
that I said? Mr. Melville, let me start with you.
    Mr. MELVILLE. Well, I think you really laid out the issue 
at hand here, which is this creates behavior that reduces 
access and increases cost. I think everyone in this room on the 
committee and here in the audience is committed to looking for 
solutions that reduce health care costs and that increase 
access to health care. It is something our country is 
struggling with. And quite frankly, this policy takes us in the 
wrong direction. Because as Dr. Feder mentioned, the consumer 
has to pay a copay, but his insurer is paying the balance of 
that doctor's visit. The copay may be $10 or $20 or $30, the 
system is paying the $100 or whatever the balance is.
    And in addition to that, as you mentioned, the time out of 
the office as well. Caregiver moms miss twice as many days for 
taking care of their children than they do for their own health 
care. And the access 24/7 to an OTC medicine allows parents to 
treat their children and often allow their children to go to 
school, allow the parent to go to work. And the cost associated 
with absence because of these illnesses is tremendous. And it 
was never really quantified and I am sure was not quantified 
when the CBO looked at the savings as a result of this change 
in law.
    Mrs. BLACK. I think I am going to run out of time here. I 
see it clicking. I have got less than 10 seconds left. So if 
anyone does have additional remarks or comments pertaining to 
what I said I would ask that you would give it to us in 
writing.
    Thank you very much.
    Chairman BOUSTANY. Mr. Becerra, you are recognized.
    Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for 
your testimony. I just want to make sure I understand what we 
are talking about. We are talking about over-the-counter 
medicines. So to be clear, over-the-counter medicines are 
medicines that you or I or anyone in America, any consumer, 
could purchase right now by just walking into the pharmacy and 
plucking it from the counter. This is not a medication that 
requires a doctor's prescription. So we are talking about your 
run of the mill flu medication, it could be aspirin or 
something for a migraine, it could be the alcohol or peroxide, 
hydrogen peroxide you might use to help heal a wound, things 
that you can get without having to go to the doctor to get a 
prescription. Now, because of the law the way it is if you 
don't have a prescription, you buy that medicine, you can't get 
a tax write-off for it. If you buy that cold medication with a 
prescription and buy it off the counter, not going to a 
pharmacist but right off of the counter, you can write it off 
from your taxes. And so what we are talking about is the fact 
that there are Americans who want to take advantage of the fact 
that by purchasing medicines that any American can purchase 
that they can get a tax write-off, they can reduce their taxes. 
And so it is an incentive to call Dr. Feder or any other doctor 
and say, Dr. Feder, I have got a cold, it is really bad, could 
you give me a prescription so I can go buy that cold 
medication. And the inconvenience and so forth that you have 
explained I think arises from all of that.
    This is the concern I have. I can understand why most 
Americans want to reduce their cost of health care because 
health care is extremely expensive. But have any of you figured 
out how we would cover the $7 billion cost of eliminating that 
provision? Because by giving that select group of Americans who 
has FSAs or HRAs or HSAs, these flexible spending accounts, 
these different type of accounts, we are giving a select group 
of Americans a chance to deduct the cost of that flu medicine 
from their taxes where the majority of Americans buy the same 
medicine, buy the same pills but don't get to deduct those 
costs from their taxes. And so the cost to taxpayers who don't 
have FSAs or HRAs or HSAs are passed on to the majority of 
Americans--yeah, the cost of those deductions are passed on to 
those who don't have these flexible savings accounts. And so if 
we want to return to the days when a certain segment, the 
minority of Americans could deduct the cost of that flu 
medicine from their taxes we have to come up with $7 billion in 
offsets, because that is what the cost will be over 10 years. 
Someone pays for that. Other taxpayers have to pay for that, 
either paying more taxes elsewhere or we deficit spend and 
borrow the money from China.
    So have any of you thought of the solution, because we 
talked about solutions, what the solution is? How do we pay for 
the $7 billion cost of reinstituting a program that allowed a 
minority of Americans to deduct the cost of their over-the-
counter medicines from their taxes, which the majority of 
Americans cannot do?
    If you have it paid for, I would love to hear it. Otherwise 
that is the dilemma we have. I would love to do what you want 
to do, because I would love to help those Americans, the 
minority of Americans who can deduct the cost of their over-
the-counter medicines from their taxes, but I have to pay for 
it, I have to find a way to pay for it. And right now we are 
being told that we have to cut Medicare, we are being told we 
have to cut Meals on Wheels for seniors, we have to cut funding 
for our schools because we are in deficit. And on health care 
we are told, and Dr. Feder probably knows this very well, we 
have got to do something about this sustainable growth rate 
reimbursement for physicians and other providers which is not 
keeping pace with the cost of inflation for doctors to be able 
to provide health care. And that is going to cost a ton of 
money.
    Dr. Feder, I don't know if you would rather we cover this 
but not take care of the SGR doc fix. And so it is easier said 
than done, and given that these provisions that you would like 
to see in place are a convenience and help a minority of 
Americans, and by some estimates the FSAs impact about one in 
seven workers which means they touch the lives of about 30 
million Americans, that is 1/10th, 10 percent of Americans 
participate in FSAs or are touched by FSAs, that means 90 
percent of Americans go to the same pharmacies, purchase those 
same medicines and they can't deduct them from their taxes. And 
so it would be helpful if when you come here to tell us to 
really rethink and restore that program if you help us figure 
out how we come up with the $7 billion it will cost to 
reinstitute the program.
    Thank you.
    Chairman BOUSTANY. I would remind my friend that he just 
made a good case for the fact that we still have a massive 
health care problem in the country and it has not been 
adequately addressed by the passage of a health care law and so 
we have much more work to do. And I think any of those things 
that could empower individuals and families to take more 
control of their health care destiny is probably a good thing 
in the long run.
    Mr. BECERRA. But Mr. Chairman, on that point, a few years 
ago some years back there was no such thing as deducting the 
cost of your over-the-counter medicine. It came into play as a 
result of the creation of the FSAs and so forth. And I think it 
encourages folks to make sure that they take the medicines they 
need. But this is the time of austerity and I think, Mr. 
Chairman, we have to figure out what are the most important 
things. Is having a consumer go to Dr. Feder and say, Dr. 
Feder, I need to see you because I need you to give me a 
prescription so I can buy that cold medicine that I can buy 
over the counter on my own without a prescription----
    Chairman BOUSTANY. We will continue this debate.
    Mr. BECERRA. That is the question, that is the question.
    Chairman BOUSTANY. Ms. Jenkins, you are now recognized.
    Ms. JENKINS. Well, I want to thank the chairman again for 
holding this hearing and for all of you for testifying today. 
We have got great bipartisan support in the House and even on 
this Ways and Means Committee to repeal this provision. And I 
hope that hearing some of the facts today will encourage even 
more of our colleagues to support removing this burden on 
consumers.
    Mr. Chairman, I would ask unanimous consent to enter a 
letter of support into the record. It is from the Health 
Choices Coalition and it is simply supporting the repeal of 
this prescription requirement from the health care law.
    Chairman BOUSTANY. Without objection.
    [The letter follows: The Honorable Lynn Jenkins]

    [GRAPHIC] [TIFF OMITTED] T9936.034
    
    [GRAPHIC] [TIFF OMITTED] T9936.035
    

                                 

    Ms. JENKINS. One of my constituents back home, Donna, in 
Fort Scott, Kansas, wrote me at the beginning of this Congress, 
and this is what she said: My husband and I try to stay very 
healthy and really enjoy the flexibility of the health savings 
account as it once was. It was very convenient to be able to 
buy over-the-counter products to manage our own health care. 
Americans should choose a healthier lifestyle which could cut 
down on costs tremendously. I do not know why anybody wants the 
government to be so involved in the management of the money we 
have worked so hard to earn. Please work hard to get this part 
of the health care act repealed.
    And I struggled to provide a rational response to this 
constituent as to why this prescription requirement was even 
included in the President's health care law in the first place. 
It doesn't provide better health care for consumers and I can't 
figure out how it would lead to creating the 4 million jobs 
that then Speaker Pelosi promised the bill would create. To me 
the only logical response was that it was a simple line item 
that provided revenue to help pay for the massive overhaul, 
which is why we have introduced legislation to repeal this 
provision.
    Ms. Hatcher, you mentioned in your testimony all the work 
your organization did to comply with the original 2008 IRS 
guidelines. Then we passed the health care law and you all get 
new guidance just weeks before you must comply with these new 
prescription requirements. You mention a company spent about 
$100,000 to comply with this new provision from the health care 
law.
    Do you know what the average salary is for a full-time 
employee in your member companies?
    Ms. HATCHER. It would depend upon the position. There would 
be a wide variation between the various positions in the store, 
but it would be well below that expenditure.
    Ms. JENKINS. So you think you could hire at least a couple 
full-time employees for the cost of just getting the system set 
up?
    Ms. HATCHER. Certainly.
    Ms. JENKINS. What concerns me most about this investment 
you all had to make was that it may have come at the expense of 
your members creating new jobs at a time when that was what we 
need the most. Could you estimate for me or have you received 
any anecdotal feedback on how this new requirement is hindering 
job growth for your members?
    Ms. HATCHER. Well, certainly, as you mentioned, the 
expenditures that were put into the system, and there are 
ongoing expenditures that it didn't really factor in. Just to 
add to Congresswoman Black's list, one additional expenditure 
is the most expensive position and the hardest to fill in the 
supermarket environment is the pharmacist position, and now we 
have to have a pharmacist involved in the sale of every OTC 
product that has a prescription, and it has taken him away from 
really counseling sick patients, so certainly I would add that 
to the list of those expenses.
    Ms. JENKINS. Okay, thank you. Mr. Melville, you mention a 
study in your testimony, specifically the fact that every 
dollar spent by consumers on OTC meds saves six to seven 
dollars for the U.S. health care system as a whole. Can you 
elaborate a little more on some of the findings of that study?
    Mr. MELVILLE. Sure, thank you. The study looked at a 
hypothetical world that said if OTC medicines were not 
available, what would consumers do, and so they polled 3,500 
consumers and got a direction from them that many of them would 
go to see a doctor, many of them would go to an emergency room, 
many of them would seek a more expensive prescription medicine, 
all behaviors that add costs to the health care system, not 
reduce costs, and by looking at that and extrapolating, it came 
up to about $102 billion in current value today because of 
OTCs. OTCs keep consumers or patients out of a medical office 
when they don't need to be there. It allows them to purchase a 
product on their own without the involvement of a pharmacist 
per se, no dispensing fee. It is cost-effective health care. It 
is not appropriate in every situation, absolutely not, but 
where it is appropriate, it is cost-effective and it should be 
encouraged, and this study shows the benefits of OTC medicines. 
It makes it difficult to understand how this provision could be 
scored at saving money for the health care system when it is 
causing people to go see doctors.
    Ms. JENKINS. Thank you. Mr. Chairman, I yield back.
    Chairman BOUSTANY. Mr. Marchant, you are recognized.
    Mr. MARCHANT. Thank you, Mr. Chairman. In 2009 the 
President told the Nation that he was not going to be in favor 
of raising taxes on any family that made under $250,000, yet 
looking at the rules of Obamacare, it seems that exactly the 
opposite will take place. The ban on over-the-counter purchases 
without a prescription is estimated to raise taxes on families 
of about $5 billion a year.
    Can any of the witnesses each comment on the families that 
you have experience with that you see are affected by this law? 
Do they fall in the under $250,000 category or do they fall 
above the $250,000 category?
    Mr. Melville.
    Mr. MELVILLE. Well, as I cited earlier, the most recent 
data we were able to obtain showed that the average FSA 
participant earned $55,000 a year. As a result of this 
provision, if they had an FSA account before the provision took 
effect, their cost for OTC medicines went up 10 to 35 percent 
after the provision took effect.
    Mr. MARCHANT. So that would be a tax increase?
    Mr. MELVILLE. It is certainly a cost increase to the 
consumer.
    Mr. MARCHANT. Mr. Feder, Dr. Feder.
    Dr. FEDER. I can tell you that, you know, my patients, I 
practice in the great State of Kansas, and I practice in a 
fairly affluent county, but I guarantee you these patients make 
far less than $250,000 a year, and we see indigent patients, we 
see patients that don't have insurance, we give out samples to 
patients, and we still cannot keep up with the complaints about 
they can't afford this and they can't afford that, and this is 
just one more area that I think we can empower and help our 
patients in that they don't have to come to the office and 
spend money to see me to write them a prescription that they 
can get over the counter.
    Mr. MARCHANT. Thank you. Mr. Taylor.
    Mr. TAYLOR. Thank you. Well, Sjogren's affects 1 percent of 
the U.S. population, so surely the majority is going to be 
earners under $250,000, affects mostly women, but it surely 
does affect people that don't make $250,000, and the patient 
choice is so important for our patients, but to understand 
Sjogren's, our patients use between 10 and 17 products daily 
for their disease from dry skin lotions all the way up through 
dry eye options to dry mouth options, et cetera. And so surely 
with the prescription issue, it would fill the doctors' offices 
with having them write prescriptions, and it is causing 
problems for our rheumatologists, our ophthalmologists to write 
those prescriptions for our patients.
    Mr. MARCHANT. Ms. Hatcher.
    Ms. HATCHER. I don't have any specific data, but where we 
have seen the use of FSA cards, it is throughout all income 
levels in a community, it is not limited to upper income 
levels, it is throughout all income levels.
    Mr. MARCHANT. Yes, sir?
    Mr. VAN DE WATER. Mr. Marchant, it is important to look at 
not just the tax effect of this particular provision, but of 
the entire legislation of which it was a part. As Ms. Jenkins 
correctly noted, the purpose of this provision is not just to 
raise revenues for the sake of raising revenues but to help 
finance the major expansion of health coverage that was 
provided by the Affordable Care Act. Indeed, using the figures 
and the testimony we heard earlier, there are people, you know, 
the average person benefiting from an FSA will lose perhaps 30 
to 40 dollars a year on account of this limitation on over-the-
counter spending. However, the Affordable Care Act is also 
extending health coverage to 33 million Americans who haven't 
had it and providing tax credits to low--which are focused on 
low- and moderate-income Americans. So it seems to me, and I 
can say that as a person who has this year for the first time a 
flexible spending account and who earns less than $250,000 a 
year, I for one am quite happy to pay an extra $30 a year to 
help provide health coverage to the less fortunate of our 
citizens who otherwise wouldn't have it.
    Mr. MARCHANT. So in your view it is--it was basically a 
cost shifting from one group of people to another group of 
people?
    Mr. VAN DE WATER. It is not a cost shift. It is a way to 
raise revenue to pay for a very important program.
    Mr. MARCHANT. That would be what we define as a cost shift. 
Thank you very much.
    Mr. TAYLOR. Mr. Marchant, may I please add, we have all 
these new people going to be going on the health care rolls, 
and we won't have time to see them in the physicians' offices 
if people that do have FSAs are taking up time to get 
prescriptions, and that is the biggest challenge that we have 
in the health care system. There is only 39 percent on FSAs, 
but they will be taking up time, important time for other 
people that could get in, need to get in to see their doctors, 
which is very important to remember as well.
    Mr. MARCHANT. Thank you, Mr. Taylor.
    Chairman BOUSTANY. Mr. Reed, you are recognized.
    Mr. REED. Thank you so much, Mr. Chairman. Mr. Van de 
Water, I do appreciate your generosity in giving your money to 
a segment of the economy, of the population for paying for 
their health care when they need it, but would you agree that 
some people may not want to be that generous or that some 
people feel that the money in their FSA accounts is the money 
that they earned and it is their money, and they should have 
the choice whether or not to pay for someone else's health care 
in America?
    Mr. VAN DE WATER. Whether or not to have an FSA is itself a 
choice. As I said, up to this year I had not exercised an FSA.
    Mr. REED. I think, sir, what you said is you appreciated 
the fact that you had an opportunity because of what you make 
under your FSA to pay for those people that may be in a 
situation that can't get health insurance, and I appreciate 
your generosity. But what my concern is is why in Washington, 
D.C. do we have an attitude that--you may feel that way, but 
there is millions of people I am sure that are out there that 
don't feel like you, and we are directing them from Washington, 
D.C. under this provision to say, well, so sorry, so sad, we 
are going to tell you we are going to take your money.
    Would you agree your money in your FSA is your money or is 
it the government's money? Whose money is it in the FSA? Your 
FSA in your account, whose money is it? Is it the government's 
money or is it your money? Did you earn that money?
    Mr. VAN DE WATER. The tax benefit is----
    Mr. REED. No, no, the money in the FSA, you earned it, 
right?
    Mr. VAN DE WATER. We are not talking, sir, about the money 
in the FSA per se. My money is my money.
    Mr. REED. No, I am talking about the money----
    Mr. VAN DE WATER. We are talking about whether I should get 
a tax benefit for buying a cold remedy.
    Mr. REED. But that is your money that you earned in your 
FSA. Does anybody else have an FSA on the panel? Okay. Do you 
feel that is the government's money or is your money?
    Mr. TAYLOR. It is my money that went in there.
    Mr. REED. Yeah. So do you have any problem with us coming 
in and using that FSA money for something else? Do you 
appreciate the fact that I, here in Washington, D.C., under the 
Affordable Care Act am directing that I am going to take that 
money and put it somewhere else? I mean, that is what I am 
hearing from the testimony from the panel today. Am I missing 
something?
    Mr. VAN DE WATER. Yes, that is a mischaracterization of my 
remarks, sir. I can use my money to buy over-the-counter drugs 
at any time. At issue is the amount of the tax subsidy that I 
should get, and the tax subsidy, which is what we are talking 
about, is not my money.
    Mr. REED. That $30 is not your money?
    Mr. VAN DE WATER. I have no right, God-given right to a tax 
subsidy for buying cold medicine.
    Mr. REED. Am I missing something? Isn't that $30 part of 
the FSA money that you are--you essentially earned, you are 
just paying the $30 as a tax on the money you earned even 
though you--because you are getting the tax benefit from the 
transaction, you are paying the $30 at the end of the day.
    I guess my point, I am just trying to stress the point that 
there is an attitude here in Washington as a new member that I 
see that is clearly on display here in that the FSA tax benefit 
is looked at as if that is Washington's money, not the 
individual who earned its money, and I have a fundamental 
disagreement, and I believe you can tell where I come down on 
that side of the equation.
    If I could, I just want to get into a little bit--Mr. 
Melville, can you give me any medical justification as to why 
this policy was enacted?
    Mr. MELVILLE. There is no medical justification that I am 
aware of. These are often referred to not only as over-the-
counter drugs but nonprescription drugs. By their very nature, 
they don't require a prescription, so the tax policy is 
inconsistent with the medical treatment of that product.
    Mr. REED. Would anybody disagree with that assessment on 
the issue?
    [Witnesses nodding.]
    Mr. REED. Now before this provision was put in the 
Affordable Care Act, was there any consumer advocates or any 
professional doctors or hospital organizations that were 
advocating or suggesting using FSAs and HSAs to purchase OTC 
medication that was harming patients or represented bad health 
policy? Was there anybody during that debate raising those 
concerns? Anybody? Yes, no?
    Mr. MELVILLE. No.
    Mr. REED. Well, with that, I yield back, Mr. Chairman. I 
clearly see what the policy was for. It clearly was a revenue--
I do appreciate your candor on the statement you made, Mr. Van 
de Water, for the record, that it was clearly a revenue source 
to pay for the Affordable Care Act, and I do appreciate that 
candor.
    With that, Mr. Chairman, I yield back. Thank you.
    Chairman BOUSTANY. I thank the gentleman. Mr. Paulsen, you 
are recognized.
    Mr. PAULSEN. Thank you, Mr. Chairman. Let me just thank you 
also for holding this important hearing today. It is something 
I have certainly taken an interest in personally as well as 
Congresswoman Jenkins. In fact, her and I today have an opinion 
piece that has been published in the local Roll Call 
subscription newspaper, so without--I ask unanimous consent to 
submit that for the record if we could, Mr. Chairman.
    Chairman BOUSTANY. Without objection.
    [The article follows: The Honorable Erik Paulsen]
    [GRAPHIC] [TIFF OMITTED] T9936.036
    

                                 

    Mr. PAULSEN. Thank you. Several members on the committee 
actually have introduced specific legislation to target fixing 
this onerous provision for over-the-counter medication. So in 
addition to Ms. Jenkins' bill, I have got the legislation that 
was mentioned in the testimony, there is 128 cosponsors, Mr. 
Reichert has a legislation, there is bipartisan support for 
this. You know, it is really no wonder when you come up with 
these types of provisions why the President's new health care 
law still remains so unpopular. I mean, I know it was targeted 
mostly towards access, but it doesn't address the cost side of 
the equation at all, and certainly health care savings 
accounts, flexible savings accounts, and then these over-the-
counter medications that have grown more popular because they 
have gone through FDA clearance, they become more readily 
available, it only makes sense they are going to be more widely 
used as an opportunity to reduce costs in the healthcare 
system. We have actually made this new health care law more and 
more expensive ironically. So it has gone from like $900 
billion to like $1.7 trillion, so it has, like, doubled in 
cost, and so it is no wonder that the law itself is so 
unpopular.
    But what I think is really interesting, though, is that you 
have got 33 million Americans that are in families that use 
these flexible spending accounts. They are offered by 29 
percent of small businesses and they are offered by 85 percent 
of large employers as well. So you have got employers that are 
really pushing out to their employees, hey, take advantage of 
these accounts because it allows you to use your own health 
care dollars for your own health care needs, and at the same 
time Congress comes in and pulls the rug out from under them. I 
get these calls from these suburban mothers who are really just 
flabbergasted and ticked off that all of a sudden they can't go 
get allergy medication for their children unless they go to a 
doctor for that prescription. So you not only have to have the 
copay, but then you do have the insurance cost that gets paid, 
that gets spread out among everybody, so then you are 
increasing health care costs for everybody. It is going in the 
opposite direction of the intended effort of health care 
reform. So the consumers don't like it, the doctors don't like 
it, and the employers don't like it.
    Let me just ask this question because this has not come up 
in discussion today, but another restriction that is actually 
in the new health care law is also a restriction on the cap of 
the amount of money that can be put into these accounts each 
and every year. As we know, some health care procedures are 
fairly expensive. I will give you one example in particular, 
but you have got a $2,500 cap essentially now that has been 
placed on these accounts, and that starts in January 1st of 
this next year, so we are going to hear a lot more from 
consumers that are going to be impacted by this new cap, and I 
am concerned we are going to see similar problems, so you have 
got millions of consumers that use these funds, their own 
health care dollars with more restrictions. How will this--as 
an example, I will give you an example of how this might 
restrict dental care. So if you have got a consumer that is now 
going to be able to--say if they want to use an oral health 
decision for dental care, and they have got no money really to 
cover their out-of-pocket expenses, so they go to, say, a 
surgical dental implant for like a jaw bone implant in Dayton, 
Minnesota. According to fairhealthconsumer.org, this procedure 
might cost like $1,221, so a significant amount of money. That 
is a cost that the consumer is going to directly have to pay 
after their insurance coverage. Then you add a ceramic 
retainer, you know, for your child, of course, you are at $900, 
so you have almost used up the whole cap right there.
    Let me just ask this, Mr. Melville or any others that might 
want to comment, after you have had several of these 
procedures, you can use up and burn through your whole account 
right there. You know, in general, I mean, what is going to be 
the impact on the consumer with that type of a provision as 
well? Is that moving us in the wrong direction, Mr. Melville?
    Mr. MELVILLE. Well, sir, I have a 14-year-old daughter who 
is getting braces next year, so I will be able to personally 
experience that cap in my situation, but, you know, I can't 
speak broadly towards how FSAs are utilized broadly for health 
care. I can say that the OTC spend is usually a very small part 
of the overall amount that a consumer will spend out of their 
FSA, but it is a significant amount, and I think I have heard 
today some comments saying it is not much. It is a lot for 
certain people who perhaps aren't making a lot of money and may 
have a disproportionate need. Maybe they do take an allergy 
medicine 12 months a year along with their children, and you 
add all of that up, 10 to 35 percent of that allergy medicine 
over the course of the year is real money, and I think it is 
not fair to characterize it as modest or insignificant. It is 
really significant to a lot of people.
    Mr. PAULSEN. Mr. Taylor--or, Mr. Feder, from a physician's 
perspective on the cap, I mean, another provision that we are 
going to hear about from consumers down the road here.
    Dr. FEDER. Yeah, I think so. I have patients that I do a 
physical exam on, they need a colonoscopy, a stress test, they 
need some other procedures, it can run up into the thousands of 
dollars, and sometimes they will bundle all these to do in one 
year because they have got the money to do it, and I see that, 
you know, that is not unusual to see that. They may be looking 
at an elective surgery, cataracts, although that is covered, 
but still there is going to be out-of-pocket expense. Maybe 
they want lasik surgery, there is just a host of elective 
procedures that are very expensive, and a cap obviously will 
affect that.
    Mr. TAYLOR. And Sjogren's patients on average spend over 
$1,500 a year on dental work for their dental issues that they 
have, so it is very expensive as well.
    Mr. PAULSEN. Thank you, Mr. Chairman.
    Chairman BOUSTANY. I thank the gentleman. Yes?
    Mr. LEWIS. Could I just ask one last question, Mr. 
Chairman?
    Chairman BOUSTANY. Yes.
    Mr. LEWIS. Can I do somewhat of a poll? How many of you 
favor or see health care reform as good in itself, that it is 
affordable, accessible when we have more than 50 million of our 
citizens without any health insurance, they cannot afford to 
see a doctor, many never see a doctor because they cannot 
afford it. I would just like to get--I know you are very smart, 
you have been working in this area, some of you, for quite a 
while. Dr. Feder?
    Dr. FEDER. I can address that, if I might. Yes, sir, I 
represent the American Osteopathic Association, and we are on 
record as supporting the Affordable Care Act. However, we do 
feel with any law there is room for improvement and revision, 
and I support that position.
    Mr. LEWIS. Others?
    Mr. TAYLOR. Well, the Sjogren's Syndrome Foundation is on 
the record as well of supporting the Affordable Care Act. I 
think the challenge is in any disease--I have worked in 
nonprofit health care my entire career, American Heart 
Association and now Sjogren's Syndrome Foundation--is access to 
health care and we need to do something about it, and this will 
definitely change that. The challenge with what we are talking 
about today is we will be filling those doctors' waiting rooms 
with people just needing prescriptions for their FSAs instead 
of getting those new people that finally have insurance into 
their doctors. And there is even statistics on colonoscopies. 
People that have higher incomes tend to go for more 
colonoscopies and fill colonoscopy rooms, when people that 
actually have symptoms that need the colonoscopies can't get 
in. The same thing will happen with rheumatologists and 
opthalmologists, if Sjogren's patients start filling, and they 
have been, filling waiting rooms trying to get prescriptions, 
taking away from people that really need those appointments 
because they have a real medical need for them just to get a 
prescription for eye drops or saliva substitutes or et cetera. 
Access to care is wonderful, but we need to make room for those 
people to get into the doctors' offices as well.
    Mr. LEWIS. Thank you. Ms. Hatcher, do you have a point of 
view here?
    Ms. HATCHER. Sure. I mean, just in general in terms of 
affordable care, obviously there is some work that needs to be 
done. This particular provision we have been against all along. 
We did a lot of work to put an advance system in place, and we 
just felt like the rug was taken out from underneath us. When 
the IRS asks you to do something, you usually jump and try to 
do it, and we did, and then we feel like, you know, all of our 
work was kind of useless, and so I think that is the 
frustration from our member standpoint is more of the 
investment they put into this to try to make this work and make 
the system work and then have it taken away.
    Mr. VAN DE WATER. Mr. Lewis, I think that the Affordable 
Care Act represents a wonderful achievement on the road to 
reducing the number of people in this country without coverage. 
As I said before, another one of the Act's remarkable 
achievements is that it does include provisions to pay for the 
health care expansion. Unlike, for example, the expansion of, 
you know, the provision of Medicare drug coverage back in, you 
know, the previous decade, which was not fully paid for, the 
Affordable Care Act by CBO's estimation will actually modestly 
reduce the deficit because it does include other spending 
reductions and tax changes to pay for it. This provision is 
clearly one of the less popular provisions, but I do think that 
it has a strong policy justification, as I have explained 
earlier.
    Mr. LEWIS. Thank you.
    Mr. MELVILLE. Mr. Lewis, my association did not take a 
position for or against the Affordable Care Act. We certainly 
support the goals of increasing access and reducing cost. We 
would agree with Dr. Feder that the law itself can be tweaked 
and improved, and this is an area that we think can be improved 
because with the expansion of coverage, it will put more 
pressure on physicians, and the last thing physicians need 
would be people coming in asking for prescriptions for 
medicines that don't require one.
    Mr. LEWIS. Thank you. Thank you, Mr. Chairman.
    Chairman BOUSTANY. I thank the ranking member. I would just 
conclude by saying that this hearing was focused on this 
particular provision, first of all, a provision that is going 
to add cost to the health care system, and it certainly has a 
hassle factor associated with it, as we have heard from many of 
you.
    On the broader picture of the health care law that passed, 
we know obviously, yes, there was increased coverage, but does 
coverage really mean real high quality access when you consider 
that a significant amount of that expanded coverage is in the 
form of Medicaid where we have doctor shortages and physicians 
who currently are not seeing Medicaid patients or trying to 
markedly curtail their Medicaid exposure because of the very 
poor reimbursement that doesn't meet costs. We are going to be 
simply pushing all of these individuals into the emergency 
room, and so while you can talk about expanded coverage, does 
it mean high quality access? And at the same time we do know 
that costs are going up and accelerating at a rate, according 
to the CBO, even faster than if we had done nothing.
    So there are significant problems remaining, and while I 
think this was a very valuable hearing to focus on this one 
provision which is causing a lot of consternation on the part 
of families across this country and adding to cost, we have 
clearly much more work to do in health care, and so with that I 
want to thank the witnesses for being here today and for your 
testimony. I want to remind you that members may have some 
additional questions they may submit in writing to you, and 
those questions and your answers would be made part of the 
official record. So, again, thank you for being here today, and 
that concludes our hearing.
    [Whereupon, at 4:00 p.m., the subcommittee was adjourned.]

    [Submissions for the Record follow:]

                       The Honorable Wally Herger

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                      The Honorable Dave Reichert

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                      American Medical Association

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                        Center for Fiscal Equity

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                           Henderson Brothers

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                              Infinisource

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                   National Business Group on Health

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