More Responsible Approach To Healthcare Reform

Signed into law on March 23, 2010, the Affordable Care Act (better known as Obamacare) was a large step towards a needed reform in healthcare. However, it was a large step in the wrong direction.

Democrats and President Barack Obama resorted to a flawed system of government-subsidized healthcare accompanied by a mandate (now regarded as a tax) forcing every American to purchase healthcare if they are not offered coverage by their employer.

Critics have highlighted many issues and possible problems with Obamacare ranging from underfunded “high-risk pools” to a growing government deficit due to a lack of revenue to provide for those who will be receiving healthcare for very cheap prices. Surrounding the law are several myths that Barack Obama and his allies in Congress like to parade around Capitol Hill and through the media.

Republicans and Democrats agree that the American healthcare system is not perfect. It is flawed, and there are many Americans who are not receiving coverage simply because they cannot afford it. However, despite these worries, Barack Obama’s healthcare law is not the solution to an ever-growing problem. In fact, the Affordable Care Act could likely cause many more issues separate from the issue of how many Americans are covered by health insurance.

It is for these reasons that I bring forth a new idea for healthcare reform. I feel that this plan is one that both parties can rally behind because of its simplicity and ease of institution. The Affordable Care Act was highly criticized because the Speaker of the House herself did not even know what exactly was in the law. Nancy Pelosi admitted this when she uttered her now famous phrase, “We will just have to pass it to see what is in it.” If a law is so complex and large that those voting on the law do not even entirely understand the principles of it, then it is not a good idea to blindly accept the law so that America can “see what is in it.”

Here is my proposed healthcare reform plan:

Political ideology and world viewpoints aside, economists and politicians generally agree on the fact that the laws of supply and demand and the dynamics of price action are constantly at work in the market. Furthermore, all Americans generally agree that incentives are very strong things. Consider taxes for example. If a business owner will be taxed higher for every dollar that he makes over a certain point, what incentive does he have to work harder in order to earn more money above this tax threshold? If this threshold were not present, then he would be much more inclined to work, therefore, earn more money.

The reason I bring up this tax incentive, or lack thereof, is because of the role that taxable income can play in a smarter route to healthcare reform.

Consider this scenario: A physician runs his own practice in downtown Charlotte. Every day, he treats people that have health insurance; he receives his payment from the insurance company, and he pays his taxes. His costs remain high because of his need to make a profit, therefore stay in business. He must take into account how much of a percentage he will be taxed on the revenue that he is generating.

What if this physician did not have to worry about how much of a percentage the government would take in taxes, however?

In my plan, when a doctor or physician treats someone without health insurance, every cent’s worth of that treatment will be non-taxable income that the doctor has generated. For instance, if Mary, an uninsured single mother, gets treated for an illness at Doctor Smith’s office for $100, Dr. Smith would not have to pay taxes on any of that $100. However, taxes would still be taken out on income generated from payments originating from insurance companies.

Obviously, in this situation, Dr. Smith would not set the same price for Mary that he would for an insured person. In an effort to attract more uninsured patients, Dr. Smith would lower his prices for the uninsured so that he could generate more income that would not be taxed. Dr. Roberts, another physician down the street would see that Dr. Smith has lowered his prices for the uninsured, and he would attempt to undercut his prices to be more attractive. Barack Obama has flaunted the idea of “shopping around” for the most affordable coverage. This plan causes a healthcare market that promoted exactly that.

Think of how gas station owners determine prices. There is a general accepted price for a gallon of gas in each state based on the cost of a barrel of oil, the state taxes on gasoline, and other factors. After determining the accepted price in the state, gas station owners attempt to attract more customers by setting their prices a little lower than their competitors. Why would doctors not do the same provided with an incentive to generate more income for themselves?

Furthermore, this plan has an effect on the already existing insurance companies. To prevent their customers from dropping their healthcare plan and choosing to become uninsured due to lower costs, premiums would decrease. The insurance companies would also want to remain attractive to customers, and the only way of doing this would be to lower the cost of their own healthcare coverage. Premiums would especially decrease if these insurance companies were also extended tax breaks.

I understand that the issue of high-risk patients and those with pre-existing conditions would still need to be met. No matter to what extent doctors lower their costs, those considered “high risk” would likely still not be able to pay for the frequent coverage that they would require. However, my plan does a much better job at addressing the largest portion of Americans who are uninsured.

This plan is far superior to Barack Obama’s Affordable Care Act for several reasons.

First, there is no government healthcare pool that requires an individual mandate to ensure an equal distribution of costs. Let’s be honest, if the government must require that every uninsured American either buy healthcare or pay a tax in order to pay for its own subsidized healthcare, it is highly likely that the plan will crash and burn. Such an approach is just not smart. In my plan, neither the government nor individual citizens are responsible for ensuring that costs are equally distributed. The pure method of implementation is already much simpler.

Second, Obamacare provides no incentive for doctors or physicians. Many have already expressed concern over the healthcare industry and whether this law may negatively affect those that work in the industry. My plan provides an incentive for all in the healthcare field to provide more coverage. If we are seeking to reform healthcare, is it better to incentivize those in the industry or ultimately hurt them through government-subsidized healthcare that cuts into their profits and ability to make their own decisions?

Thirdly, the current Affordable Care Act is a job killer. If a business hires over 50 employees, then it is required to either buy every employee equal healthcare or pay a penalty. Why would any small business seek to hire if they are near this threshold? With this threshold removed, businesses can again feel free to hire new employees.