Baucus bill cuts OTCs from FSAs

NEW YORK Determining just how much FSAs are utilized in the purchase of OTCs has always been somewhat of a fuzzy science. Thanks to the U.S. Joint Committee on Taxation, we now have a government source suggesting that about $460 million per year in sales tax revenues would have been generated in the ensuing five years. Using state sales tax rates as of July 2009, the mean average tax across all 50 states plus the District of Columbia is 5.1%. That would suggest that as much as one-third of all OTC sales would be a part of an FSA transaction ($9 billion out of more than $28.5 billion). Preposterous.

Recently, in announcing a joint FSA program with the National Community Pharmacists Association CEO Fred Hawkins of Finpago, a company that processes FSA  transactions, estimated that the average pharmacy generates $60,000 per year associated with OTC purchases using an FSA account. Projected across 37,000 pharmacies in the U.S., that represents some $2.3 billion in OTC sales paid for through an FSA program.

The true FSA/OTC figure is probably somewhere in the middle.

This exercise in fuzzy math, using information from disparate sources and piecing together a formula to justify some broad conclusion, all of this really emphasizes one thing — utilization of FSAs to supplement OTC expenditures is popular among consumers. Oh, and that FSA use is growing, becoming more convenient to the end consumer thanks to debit cards. Oh, and that because healthcare is becoming so dang expensive one in every three Americans is putting off care in favor of an OTC remedy (courtesy a July 2009 Kaiser Family Foundation poll).

Popular; convenient; more affordable. And all of that begs the question: Why would taking OTCs off of the FSA rolls even be a consideration?