Rep. K. Michael Conaway (R-TX) offered the following comments after the house approved the Protect Medical Innovation Act of 2012, H.R. 436.
"With millions still out of work, a $1 trillion deficit and an exploding national debt, the last thing America needs is more problems from Obamacare," said Rep. Conaway.
"This measure eliminates an innovation-destroying 2.3 percent tax on the firms who make medical devices created to fund Obamacare. Set to begin next year, this tax would increase cost of everything from mundane devices like walkers and wheel chairs, to lifesaving equipment like oxygen and MRI machines, to treatments for this century's greatest killers, like stents and pacemakers. It would hit the newest, most innovative firms the hardest and mean that fewer dollars will be spent researching and developing the disruptive technologies we need to drive down healthcare costs.
"Today's legislation also repeals a portion of Obamacare that prevents almost 50 million Americans from using the hard earned money in their health savings accounts or flexible spending accounts to buy over the counter drugs without a prescription."
H.R. 436 repeals two revenue-raising provisions originally included in Obamcare as "offsets" and reforms how Flexible Spending Arrangements (FSA) holders manage their account balances.
1. It immediately repeals the 2.3% excise tax on manufacturers and importers of medical device products scheduled to take effect January 1, 2013. Many industry reports estimate that this tax will lead to the loss of at least 43,000 American device-related jobs impacting every state as well as increase the cost of medical devices for health care providers and consumers.
2. Beginning in 2013, it repeals the prohibition on the use of tax-preferred accounts, such as FSAs, Health Savings Accounts (HSA), Archer Medical Savings Accounts (MSA), or Health Reimbursement Accounts (HRA), to purchase over-the-counter (OTC) medications (except insulin) without a prescription.
3. Beginning in 2013, the bill allows FSA holders to "cash out" (and be treated as normal, taxable wages) up to $500 of their unused FSA/HRA balance at the end of their health care plan year. Under current law, unused FSA balances are forfeited back to the employer. In other words, FSA balances are considered "use it, or lose it."
According to the Joint Committee on Taxation (JCT) and Congressional Budget Office (CBO), these provisions reduce taxes by approximately $37 billion over ten years. To prevent increases in budget deficits as a result of decreased revenue, the bill includes an offset to recapture of overpayments from Obamacare's premium exchange subsidies. According to JCT and the CBO, this offset increases revenue by $12 billion and cuts spending by $31.9 billion resulting in overall deficit reduction of $6.7 billion over ten years.