First, every crackpot in America has their own opinion on this, so I'm throwing my idea into the ring.
Here is my proposal.
Change the tax code to allow physicians and other healthcare entities to deduct their bad debt/losses from truly indigent patients.
Voila--doctors and hospitals have an incentive to provide free care (which isn't being done enough), and the uninsured and indigent can all get healthcare. And all without increasing taxes. I suspect that even for profit imaging centers would start providing MRI scans to indigent patients for the benefit.
How would we do this systematically to prevent gaming the system?
1. Set charges to a predetermined amount. This is so someone can't overcharge just to be able to write it off. The amount would have to be a ridiculously low amount, so I would suggest linking it to the Medicare fee schedule.
2. Services would have to be medically necessary (like Medicare).
3. Favor key policy issues, such as primary care and preventative services, with an incentive premium. For example, pay smoking cessation counselling, preventative check-ups, mental health services and similar items at a bonue of perhaps 110 to 150% of Medicare charges.
4. Cap the maximum deductible by dollar amount or percentage of revenue.
5. Repeal favored tax status for so-called not-for-profit hospitals and work in some parity for for-profit vs. not-for-profit and nonprofit hospitals (NPH).
Results
Since most primary care physicians tend to make less money than specialists, the actual tax revenue lost would be smaller than it appears. Higher income specialists wouldn't get to deduct as much.
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Example: Cap deduction at 50% of revenue.
For a family practice clinic that made $100,000 and provided 70,000 of free care, allow them to write off 50,000. They would be taxed only on $50,000. If they are in the 25% income tax bracket, that would 'cost' the government $12,500 to provide $50,000 of new health care.
That's $4.00 of free healthcare for every $1 tax cut.
For a surgery clinic that makes $800,000 and provided $600,000 of free care, allow them to write off 50% = $400,000. They would be taxed only on $400,000. If they are in the 35% income tax bracket, that would 'cost' the government $140,000 to provide $600,000 of new health care. That's $4.29 of free healthcare for every $1 tax cut.
For a typical non profit hospital that makes $100,000,000 and provided $6 M of free care, allow them to write off $3M. They would be taxed only on $97,000,000. If they are in the 35% corporate income tax bracket, that would 'cost' the government $3 million to provide $6 million of new health care.
That's $4.29 of free healthcare for every $1 tax cut. But better yet, since we're now taxing the hospital, it's new revenue of $34 million.
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Regarding parity for for-profit vs. not-for-profit and nonprofit hospitals (NPH). There are many ways to approach this, although I suggest removing the nineteenth century special tax status for NPHs, since nationwide they typically provide less than 6% charity care. This option has been more publicized in the media and is gaining some public support. It has been estimated that this step alone would provide about 12 billion in new tax revenue. For example, in Tulsa, St. Francis typically makes a profit of over $100,000,000 each year, but doesn't pay ANY taxes on that revenue--yes, that's 100 million, or 1/10th of a Billion.
However, since we are now letting all hospitals write off charity care, there should be a shortfall--there would be some decrease in revenue from for profit hospitals and increase in revenue from NPHs.
Like most physicians, I went into medicine to help others. However, because of the extremely high cost of practicing medicine (unfunded mandates, malpractice premiums, government bureaucrats), many doctors must limit the number of uninsured patients they take or not see them at all. Personally, I take anyone and am one of the few pain management doctors in the area that even takes Medicaid patients.
For example, I have never been sued and I don't practice in a particularly high risk specialty. Yet my malpractice insurance costs about $20,000 per year. That's a teacher's salary or a new care each year that goes down the tubes to companies like AIG, Berkshire-Hathoway, etc.
By enacting the above plan, even the most avaricious physicians and hospitals would have incentive to provide free and charity care. For those of us already providing free care, it would reward us for that and encourage us to continue.
As HB 3200 appears to stagnate and support for Obama's socialization of healthcare seems to be grinding to a halt. I suspect that a late night backroom deal will be rushed through by Democrats. This could be even worse than the current legislation.
If you think this is a good idea, share this post!
Thanks
JW
