TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:
The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, strongly supports H.R. 436, the “Protect Medical Innovation Act of 2011,” which would repeal two problematic provisions of the Patient Protection and Affordable Care Act (PPACA). This important legislation would repeal both the onerous $30 billion excise tax on medical device manufacturers as well as the limitation on the use of tax-preferred funds from Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) to purchase over-the-counter (OTC) items.
The 2.3 percent tax on virtually all medical devices set to begin in 2013 will lead to increased health care costs, undercutting one of the primary goals of health care reform. The tax will undermine America’s global leadership position in product innovation, clinical research, and patient care, while also undermining the industry’s ability to create and maintain well-paying jobs in the United States. The Chamber opposes punitive taxes that target a particular industry, sector, or income group.
The new requirement that FSA and HSA account holders cannot use tax-preferred funds from these accounts to purchase OTC items unless they obtain a prescription limits access to affordable care, increases costs to the health care system, and places a new administrative burden on medical professionals. OTC items offer an affordable and convenient way for consumers to address their own health care needs. Instead, this restriction forces consumers to rely on unnecessary doctors’ visits and to potentially seek out more expensive prescription medicines.
However, the Chamber is concerned about the FSA cash-out provision of the bill, which would allow employees to take the funds that remain in their accounts at the end of the year. While the Chamber appreciates the attempt to mitigate the losses to employers with a $500 cash-out limit, we believe that this provision would disrupt the equilibrium that exists in the current arrangement. The bill would eliminate an important tool that enables employers to balance losses they incur when employees leave an employer having spent more from their FSA accounts than they have contributed to their accounts.
The Chamber strongly urges passage of H.R. 436 to repeal the onerous tax on the medical technology industry and the restriction on using funds to purchase OTC medicines. The Chamber may consider including votes on, or in relation to, H.R. 436 in our annual How They Voted scorecard.
R. Bruce Josten