Over the Counter Medicine a Victim of Obamacare

April 9, 2010 at 09:54 (General Stupidity, Health, News, Politics)

The more we know, the worse it gets. Oh, and surprise! The leftists who say they hate the big corporations and want to bring down costs are again doing the opposite. Who do you think likes these new rules? If you said big pharma, you are correct!

“They won’t be so opposed to it once they see what’s in it.” That’s the rationalization House leaders had given skittish Democrats to get them to walk the plank on Obamacare last month.

But one of the first things millions of Americans will “see” is an effective 40 percent tax hike on the over-the-counter medicines — from an antihistamine such as Claritin for allergies, pain relief medicine such as Tylenol or Excedrin, Pedialyte to prevent their kids from becoming dehydrated when they are sick, and even prenatal vitamins if they are expecting another one.

All of these items have two things in common. One is that they are classified as “over the counter” (OTC) medicines and available without a doctor’s prescription. The other is that if you pay for any of these items with money in your flexible spending account (FSA) or health savings account (HSA) — and according to this guide (pdf) from FSA administrator Benesyst, all of these are eligible expenses — you will face an effective tax increase of up to 40 percent on these items in the health care bill that President Obama signed last month.

The bill restricts individuals with these pre-tax accounts to buying a “medicine or drug only if such medicine or drug is a prescribed” one. And ironically, this tax will raise health care costs substantially by creating incentives for the use of more expensive prescription drugs even when OTC drugs are just as safe and effective.

And while the tax on “Cadillac” plans for union members was delayed in the reconciliation bill until 2018, no such luck for HSA and FSA account holders, many of whom are self-employed and entrepreneurs. These heath care consumers and voters — and there are more than 40 million of them according to the Washington Times — will still “see” this tax hike go into effect at the beginning of 2011.


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