The Affordable Care Act (ACA) also known as the Patient Protection and Affordable Care Act (PPACA), is a year old today. The health care reform law is just as contentious today as it was when being drafted.
Consumers are split in their opinion of the law. Congress simply follows party lines and supports or opposes depending on party affiliation. The House has voted to repeal but the Senate will not.
One unintended consequence
The law has produced a variety of unintended consequences but one that has been largely overlooked has a significant impact of both consumers and health insurance companies.
Beginning on January 1, 2011 consumers could no longer use FSA or HSA funds to purchase over the counter medications. These funds allow consumers to purchase medically eligible services and supplies using tax free dollars.
Until this year, consumers could use these tax free dollars to buy over the counter medications. And what did this seemingly insignificant change cause in the market?
The insured and the uninsured
For consumers who have health insurance the change is more likely to cause their health insurance carrier money which, of course, will eventually mean higher premiums. Why?
Consider a consumer who has been taking Prilosec or Claritin or any of a number of medications which used to be available only with a prescription but are now available over the counter. Until this year they could use their FSA or HSA funds to buy the medications. Now these purchases are not allowed and consumers know that going to their doctor and getting a prescription medication will allow them to get the “prescription” for a co-pay.
Sometimes the prescribed medication is the generic version of the over the counter medication but more often it is a new and far more expensive alternative. The health insurance company will pay the cost and that increased cost will translate to higher premiums next year.
For the uninsured who may have funds left in HSA, the option is to use their after tax dollars or do without. The over the counter medications are not exactly inexpensive. Adding to the cost by removing the ability to at least use previously saved tax free funds jeopardizes the ability of some to get the needed medication. Remeber the money in HSA accounts can only be used for medically qualified purchases or the account holder is both taxed and pays a penalty.
A provision that Congress intended as a way of discouraging wasteful spending has had the opposite result. Who, outside of Congress, is surprised?
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