With Obamacare Floundering, Widen Access to Health Care by Allowing Doctors Tax Deductions on Donated Services

File Photo of Doctors in Surgical Scrubs

While undoubtedly not a favorite idea among government or private sector bureaucrats and paper-pushers generally, if and when Obamacare completely stalls out of the gates, how far could we get, providing medical services to the uninsured — or others — by allowing doctors to eliminate their entire tax burdens by deducting donated services?

Positive incentives and grass-roots mobilization, focusing on the doctor-patient relationship, would seem more in order than national governmental bloat so beyond imagining that even the government bureaucrats are losing their ambition for tackling it on time, if at all.

I once ran into a surgeon who spent part of one day each week seeing patients and performing highly specialized surgeries in connection with being on the faculty of a medical school.  He saw the patients in a facility tied to one of the medical school’s residency programs, and usually performed the surgeries for that part of his practice at a nearby county hospital.

It was a defined, regularly scheduled part of his broader private practice.  As a result, he was not on salary to perform the surgeries.  He reported that the state and county were responsible for addressing the cost of the operating room and hospital visit. Yet as a private practitioner, he was responsible for any billing of his surgeries themselves.

If the patient had insurance, he would bill the insurance.  If they had Medicaid or Medicare, he would bill Medicaid and Medicare, undoubtedly earning less than what the services were actually worth.

If the patient had no insurance, and no government benefits to cover the surgery, he simply did not bill them.  He donated the services.

Yet, due to a double-standard at the IRS, the donated services would not be deductible.

This problem existed despite the fact that medical procedures have rigorous frameworks in place, in terms of their necessity and the nature and types of procedures.  They frameworks are defined by medical science, a scholarly profession with rigorous stands, as well as the law, including medical malpractice law.

Moreover, there are rigorous frameworks in place by the extensive medical insurance industry, setting out lists and descriptions of procedures, and when they are needed, as well as a dollar amount for each medical procedure, be it market-based or negotiated.

For that matter, similar frameworks exist under the auspices of the federal government itself, with Medicare and Medicaid, undoubtedly at below-market values.

Arguments about vagueness of value, in a medical context, would be absurd.

Nevertheless, while the IRS and other tax authorities are often eager and excessive to recognize definable economic value when it comes to imposing tax on income, they essentially plead economic illiteracy when it comes to deducting the economic value associated with donated services, no matter how highly developed and rational the framework for them.

Yet, if Congress forced the IRS to allow doctors, and other health care providers such as dentists and non-physician vision care providers, to deduct donated services, how many would take up the opportunity to reduce, or even eliminate their entire tax burden, by organizing regularly scheduled portions of their practice to see the uninsured or under-insured?

Of the millions of uninsured, how many would gain access to health care, including more urgent forms of health care, such as serious surgeries, if Congress acted?  How much of the gap would be closed?

Several key points would have to be nailed down:

  • health care providers would have to be able to take tax deductions for donated services
  • doctors would have to participate
  • the deduction would best be available even if no nonprofit were involved, even if the services were provided directly to individuals; nonprofits or other entities might be helpful at coordinating community outreach and connecting doctors and patients, but a more grass-roots framework would have to be included
  • there would have to the application of a framework for assigning value, such as Medicaid or Medicare levels of payment, or local market value based upon a basket of insurance plans, and their payment rates, or other economic analysis
  • when doctors are functioning as employees, such as being employed by a hospital or medical center rather than being a solo practitioner or in a practice group, efforts would be needed to ensure that their employer was cooperating with them donating services; perhaps incentives could be offered their employers as well to create more synergy
  • tax deductions would have to be available both to doctors as taxpayers taking itemized deductions, or as tax credits for businesses, where a doctor was in business as a professional corporation or as part of a practice group

Some advantages

Some advantages of allowing doctors to take deductions for donated services include restoring more of a personal connection between patient and doctor, without added layers of public or private sector bureaucracy.

And regardless of the number of doctors working as employees, the arrangement could appeal to the entrepreneurial spirit of physicians.  Instead of being turned into an employee of Obamacare, the doctor receiving a tax deduction for donated services could control his or her own destiny, reduce his connection to government bloat by reducing his or her tax burden, and take a more grass-roots approach, including by vetting members of the public instead of relying on the federal government to pile on paperwork.

Some pitfalls

One pitfall of the arrangement might by resistance by the IRS.

It might be emotionally painful to be reminded, implicitly, that their policy against allowing deductions for donated services was on shaky ground to begin with as a matter of public policy or rational economic analysis.

Moreover, elements of the IRS might become confused, and think they should quietly impede the application of the law, such as by imposing audits on the doctors in question, thinking that the measure of the program’s bona fides was how it compared with their past way of doing things, rather than what made good public policy.

Along similar lines, another pitfall might be any attempt to use what should be a fairly simplified, grass-roots endeavor, however broadly based, as an excuse for more bureaucracy, whether in the government or in the private sector.  Apparently a shocking proportion of health care spending is not on health care at all, but rather bureaucracy, including private sector bureaucracy.

On the other hand, if there are entities that think they can be helpful at facilitating the program’s success, without burdening it, perhaps some synergy might be available even for administrators.

Is Obamacare becoming the health care version of the Iraq War? Did Obama bite off more than he can chew?

It already was the case that Obamacare was widely regarded as over-broad and overly ambitious ever before it was pushed through a Democratically-controlled Congress at the behest of Barack Hussein Obama, Nancy Pelosi and Harry Reid.

Obama allies infamously declared that they, and others, should vote for the legislation without even knowing what they were voting for, (perhaps calling into question whether the legislation was really even passed at all, if nobody read it).

Now, it is turning out that Obamacare zealots were either incompetent in their analysis of its costs, or dishonest in claiming it would reduce costs.  Instead, costs would apparently go up, and some doctors apparently would even simply stop seeing patients, even as the nation reportedly could face a huge doctor shortage within a decade.

Like the Iraq War, Gulf War II, Obamacare started with questions about its legal grounds (although, frankly, the Iraq War probably had a more solid foundation legally).

In the case of the Iraq War, the initial invasion and overthrow went quite quickly and expertly.  It was lack of expertise and capacity at nation-building that created
“a long, hard slog” once Pandora’s Box was opened by stripping away the existing sovereign power, no matter how brutal, without the immediate know-how or commitment of resources to establish a whole new civil order in a diverse sectarian country with little experience at popular governance.

It turned out that a Secretary of Defense whose business background was in pharmaceuticals, after extensive years as a politician, was not up to the herculean task of organizing the logistics, supplies, strategy and tactics for rebuilding a nation out of violence.  Even the spruced-up SUV’s were not adequately armored to protect against roadside bombs.

Ironically, the one area where things were not as violent or chaotic was where the allies had started small and worked forward.  A northern region had been set up for self-governance by the Kurds.  At one time, it would have been expected that the independence-minded Kurds might have been a catalyst for instability.  Instead, the Kurds ended up being a source of relative stability in post-war developments, perhaps in part due them having a decade of experience with governing themselves, on a small scale.

Similarly, with Obamacare, the effort is just too big, and a lack of expertise and capacity is becoming painfully apparent.  A more fruitful effort might have been to start small, with more of a spiral development, to push forward as more and more citizens were served.

Instead, the whole project likely will have to be scuttled, or collapse upon its own lack of governmental capacity, when more gradual, thoughtful efforts might have borne fruit.

A more productive way to not leave the uninsured “out in the cold” would be to turn the nation’s doctors into a source of donated services, as a weekly part of their practices, in exchange for incentives like tax deductions.

As Obamacare turns into the health care version of the Iraq War, with its overreaching and lack of centralized expert capacity, it perhaps highlights a fundamental difference between talkers and doers.

For Obama, the nonpracticing lawyer, and for Obama activists, in the internet age of facebook “friends,” thumbs up icons and pretty online pictures conveying truths about life, perhaps hypothetical proposals and a focus group cranking dials every other second actually seem as if they become reality itself.

Instead of the abstract concept explaining or organizing reality, or offering a basis for action, the abstraction — or more to the point, the branding and talking about it — seem almost to replace real life.

Of course, real life does not go away, even as someone is pacified by branding, spin or pretty pictures on facebook.

Even on the subject of race, the fact that Obama is half-Black, and claims symbolic value for simply having a particular title, somehow seems to have caused even Blacks themselves to forget that Blacks are still poor, that young Blacks commit crimes and go to jail in disproportionate numbers, and that too many Black households lack fathers.

So we have another example of the abstraction distracting from reality, where the branding and image of Obama as Black Symbol somehow takes precedence over the reality in the lives of average Blacks.

The image and “PR” become more important than the substance of reality for real people.

So one is left wondering, at what point do the “chickens come home to roost” on Obamacare, when Obamacare as branding and political wind grinds to a halt, and reality starts to sink in, such that the public management side of it is not there, and such that it threatens to be exposed as a failed business model that even coerced investment by taxpayers cannot put a sheen on.

A better way to “cut losses” and actually realize gains and benefits would be to take some of the brightest, hardest-working, most ambitious persons in society, the physicians, and challenge them to build broader coverage from the ground up, from main street out, through rational incentives that they could appreciate and seize upon with zeal.

Ironically, it would be the Democrats themselves who would face the biggest incentive to trade down to the tax relief for donated services model as an interim step.  Already the Democrats, quite possibly, are motivated to delay Obamacare until after mid-term elections, to avoid being held accountable when it turns out that prices sky-rocket and the system is not really ready to function, even beyond the ethical pitfuls.

Republicans and others, meanwhile, should resonate with the idea of tax relief for entrepreneurial health care professionals, combined with tax-cut incentives for grass-roots relationships between doctor and patient.

Another incentive

An interesting additional question might be, are there yet more incentives, beyond tax deductions for donated services?

For example, should doctors and other health care providers be offered tort reform.  Should they have caps on legal damages for patients seen for free, for example.

Should they benefit from additional legal procedures for those filing medical malpractice suits, such as non-binding review by expert medical peers before a case can go to trial, with the peer findings made known to the finder of fact at trial.

Ethical Pitfalls

Some of the same ethical pitfalls of Obamacare could, conceivably, arise with the new framework of tax deductions and other incentives for donated health services.

For example, Obamacare has been faulted for forcing Americans to renounce their religious beliefs and implicate themselves in the killing of innocent life, by funding prenatal child-killing, described by the euphemism of abortion.

Obamacare also wishes to fund such things as so-called contraceptives, when contraceptives are not truly health care to begin with, when they represent a kind of ongoing expense not usually appropriate for traditional insurance, and when they attempt to force a large number of Americans to renounce their religious beliefs to be involved with subsidizing them.

Similar problems could arise with the new framework of tax relief for donated services.

On the other hand, some of the more egregious activities posing as health care, such as prenatal child-killing, sometimes hide behind the shell of a nonprofit.

At the same time, it is true that “abortionists” and other persons of an unethical bent could try to benefit from the program.

One obvious solution would be to exclude abortion, sterilization, so-called “gender change” surgeries and other disreputable activities.

At the same time, even if such activities ended up being included, the ethical dynamic still would be somewhat different.  Rather than taxpayers paying directly into a fund that paid for such activities, the above-mentioned practitioners would simply be refraining from paying as much into the public treasury, because of the deductions.

That is not say the dynamic would not still be problematic, just that it would be different.

Conclusion

Doctors and other health care providers should be allowed to receive tax deductions or other tax credits for donated health care services they provide to the uninsured, under-insured, or perhaps even additional parties.

The deductions and credits should even allow them to eliminate their entire tax liability, including by getting enough by way of a refund to cover payroll tax, state and local tax and property tax.

Steps should be taken to ascertain the amount of participation that is possible or likely, and whether additional incentives might spur participation further.

Steps also should be taken to study and ascertain the amount of current tax liability involved by the doctors, the amount and scope of services that could be provided by such a program, and how far that scope would go towards meeting unmet needs of current uninsured and under-insured.

In other words, how much participation would create how much tax relief, and how far would that go to “close the gap” for the uninsured.

Another question that could arise is whether the scope of services provided could result in government scaling back what is necessarily paid for by Medicare or Medicaid.  If the program “took off”, one would need to see the extent to which doctors participated, for example, ended up causing government to change its standards for Medicaid eligibility, since the doctors would be creating a new safety net at the edges of Medicaid eligibility.

Special effort should be paid to examining gradations and tiers of medical needs, with top priority perhaps given to catastrophic care and preventive care.  For example, one initial goal might to see whether a safety net could reliably be in place for the most catastrophic medial needs.

On a final note, given that some patients currently receive care through emergency rooms, or low-cost clinics, analysis would also be needed to examine how that dynamic was impacted as well.

At the same time, a key word in all of the above might be — synergy.  Instead of government bloat overtaxing itself (so to speak), it might turn out that the new program can work in synergy with some of the other activities.

For example, if an ER is encountering people who cannot pay, perhaps that would be a cue for a doctor participating in the donated service program spending one of his weekly half-day sessions down at the ER.

That could be where he donates his services, then using the paper trail to substantiate his tax deductions.

Or, a top-flight, world-class specialist could spend one half-day at the ER in a given week, one half-day at the local clinic in another week, and a different half-day at a nursing home.  The possibilities are endless.

The doctors participating in the donated services program, and rightfully receiving tax relief as an added incentive, could become a kind of citizens army of health care, closing the gap for those in need, not unlike the citizen Minutemen closed the gap for the defense of our young nation when throwing off the yoke of tyranny at its birth.

Additional Links & Resources

> Surgery on Sunday

> Local Volunteers Have New Access to Donated Healthcare Services by HealthGate.com

 

 


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