Tuesday, February 19, 2008

One Man's Proposal to Curb The Rising Cost of Health Care, Part 1

Saturday, my wife and I were taking a lovely walk through our neighborhood. As we walked, we discussed this post on universal health care. We both agree that we do not want universal health care, but what good is simply disagreeing without proposing a solution, or at least an alternative. I came up with something I would love to have input on. Today I will post the first two parts of where I thought we could start.

1. Medical professionals no longer pay federal taxes on income

If we removed the income tax and payroll tax from medical professionals, we would allow doctors to charge less for their services. We would also encourage more people to consider entering the medical field. Presently, various economic studies have shown that the average doctor makes less than the average businessman when the costs and time spent becoming a doctor are taken into account. In simpler terms, while a doctor's actual income may appear quite high, the investment spent to become a doctor is much higher in dollars and time, and the average business school graduate can make a higher living with less time and money invested thanks to several more years of earning power to build up with. If doctors no longer had to pay taxes, we would substantially increase their ability to make a living, some of which could be passed on to patients in the form of reduced fees. As more students become doctors, the increased supply would also reduce the cost of medical care on the system. Presently, we need similar increases in the supply of other medical professionals, such as nurses and EMT's, and removing their taxes would definitely encourage more people to consider medicine when choosing a career.

2. The Federal Government pays malpractice insurance premiums on doctors

One of the highest costs any medical practice copes with is the premium on malpractice insurance. If government paid those premiums, doctors could again charge less for their services. If particular doctors had continual problems with malfeasance, then the government could revoke their license and cease paying their premiums to avoid a rise in those costs. Managing those malpractice premiums would also encourage the government to oversee medical care as well as evaluate awards in malpractice cases more carefully. Taking more of the burden off of doctors to manage the business side of their practice would give them more time to focus on actual medical care. If the cost of paying these premiums is anywhere near the cost of insuring the forty-six million presently without insurance in this country, I would be fairly surprised. Even if it was close, paying the malpractice premiums would go a long way to reducing the cost of medical insurance as the cost of medical care reduced, making the malpractice premiums an investment in reduction.

The second half of this proposal will be up on Thursday. I look forward to plenty of comments on both days.

-- Robert


Julie Pippert said...

I'm glad you shared your ideas. I don't agree, but I do agree that the most constructive thing is to not just "whine" (so to speak) but to have ideas.

le35 said...

I think that the question again becomes, why is it the government's responsibility to make this happen? I know that the malpractice insurance companies will not stop charging as much for insurance, but maybe instead of tax incentives, we could try something like torte reform. It's good to hold Drs. responsible for their own actions, but at some point, we need to get less sue happy. There are many factors driving up the cost of medical care. One of them is government insurance. The government won't pay the whole cost of medical care, so the Drs that take Medicaid end up having to charge the other patients more for the same stuff.

Robert said...

Thanks for the input, Julie, even if you only disagree peaceably. :)

I really don't think much of paying the malpractice premiums, but that is one of the favorite reasons given for the "rising cost of health care" so why not pay those premiums and take that reason away?

I also agree that the government's present involvement in medical care does have an effect on driving up the cost of medical care for the uninsured or privately insured.

My main point in these posts is to consider how we could remove an inflationary aspect of government involvement from the process of medical care. If the government pays for services which are priced based on the need to pay taxes back to the government, then why not remove the tax and reduce the amount of money that has to be passed back and forth? I find it similarly ridiculous that the government taxes social security distributions, but that is an aside. It just shows how the government mixes the pot and confuses a lot of issues when they get involved, but they often have little positive effects.