“Any amounts paid by an insurance provider (public or private) that exceeds the premiums paid by the insured party will be deemed income for the purposes of the Federal Income Tax”
The core of the “Health Care Crisis” is all the incentives are on the side of treatment.
Let’s say you have employer paid health insurance and go into your doctor with the complaint “Doctor, I have an earache and I feel kind of funny”. Your doctor says “Hmm…. maybe we should send you in for an MRI [at a clinic owned by his brother in law] and make sure you don’t have brain cancer”.
Under Art’s plan, anything paid by the insurance company becomes income to you, reported on a 1099 at the end of the year. If the MRI costs $5,000, you’ll be taxed on that $5000 – the more income you have, the more taxes that means. If you’re at the 15% marginal rate, that means you pay $750 in income tax – essentially you have a co-pay equal to your tax rate. Perhaps you should even have to have withholding collected at the time of service.
This would cause two very important things:
- “Doctor, how much will that test cost?”
- “Is that test REALY necessary? Is there some less expensive thing we could do first?”
Note this would apply to people on Medicare as well – if some doctor wants to give you a total hip replacement surgery or a “free” scooter, the patient’s finances stay in the decision making loop. That’s the only way to solve the problem (which Government created in the first place).
The additional income raised could then be used to actually fund Medicaid or plug the hole in the Federal Budget, or lower the income tax rate for healthy people.
Interesting concept worth refining. Your initial plan has no incentive for people not paying income tax to save money. What happens if you have a serious illness? Some poor family earns 30,000 a year, receives 100,000 in medical treatment and now owes 15,000 in taxes.
Their family helps out? Their church runs a charity hospital for the poor? They sell their 42 inch widescreen TV and drop cable TV? They choose a treatment that costs $$5000 instead? They wait a month and see if it goes away by itself (most things do – the dirty little secret).
The government is broke. Medicare and Medicaid are using the coercive force of law to cost-shift away from the government’s promise to pay the bills to forcing private insurance to subsidize government care – and especially sticking it to people who have the money and are willing to pay their own medical expense but choose not to carry insurance. (My hospital bill a year ago was inflated to 4x what the insurance actually paid). Employers can’t afford to do business in this country any more except those things that can only be done in the country. You can’t force a textile factory to add $5/hr to the cost of their employees and compete against people in Pakistan making $5/day.
“Government is not the solution, Government is the problem”
An issue that would need to be addressed would be medical malpractice which drives up costs and has doctors order more tests to make sure they do not miss anything. Also, liability costs for providers and manufacturers drive up costs. If the law provided protection except in cases of gross negligence or cases where they covered up problems, I think that might help to control costs.
Another option could to be to limit profits to the administrative side of the health insurance in a situation similar to how utilities are regulated in some states. They pass along the cost of the commodity they are providing and their profits are derived from the administrative side of the business from built in profits as well as controlling admin costs….
There is no simple answer to our health care problem but a single payer, government run system will only make things worse imho…
My one-sentence replacement for Obamacare would begin, “Here lies….”