According to DHS head (as heard on NPR this morning), something like 70% of hospital visits are non-emergency, meaning that people can at least exercise more cost comparison on those bases. But I think people already largely do that, by way of ensuring the provider they use is part of their insurance's network; after coverage, cost differences are pretty small (what's the difference between 10% of $5000 and 10% of $6000?).
The real issue is when people don't have coverage or when their insurance denies it. The latter is hopefully mitigated by Obamacare's "no pre-existing condition" exclusion. The former happening is pretty obvious: people can't afford it and their employers don't provide it (single-payer would help with this). Alternatively, some people just need _a lot_ of health care, and 10% of a million dollars is still a lot of fucking money.
But if you need the health care, what are you supposed to do? That's what we mean when we say "people don't care about prices". The prices aren't going to change that much because of this legislation. The real issues are 1) not everyone is paying into the insurance pool 2) there's a needless layer of gamesmanship between insurance and providers and 3) providers and insurance are working on a profit motive.
To fix healthcare: 1) Put everyone in the pool via taxation (aka single-payer), 2) Move healthcare to public or non-profit with lots of oversight to prevent fraud.
>People complain about 20U$S copays on doctor visits that bill 400U$S to insurance.
Well if that’s the case...it’s because the $400 bill isn’t the real cost for the service and insurance actually pays $0 of the bilked $400.
What happens is the patient pays $20 copay gets billed ~20% of the $400, or $80...then everyone but the patient is happy, Dr. gets his $100 for the visit and gets a $300 tax deduction, the insurance gets its premiums from the patient and gets their 80% waived by the provider effectively shifting 100% of the cost to the patient while still being able to account for the 80/20 split on the books.
Unless there's a weird provision I'm not aware of, you could be over representing the value of the deduction.
The best thing for the doctor is to get paid (and pay taxes on) $400. The $300 deduction is of no value to them because they never recognized the $300 as income. The deduction is basically "Hey, sorry you couldn't collect your billed amount. You don't need to pay taxes on money you didn't earn".
Sorry if you fully understand this already. The lack of understanding of basic taxes is a pet peeve of mine. People make statements like "Johnny was looking for one more tax deduction, so he donated to my charity". Johnny probably cares about the charity or at least looking good in the community, because he'd have a larger net worth if he just sucked it up and paid taxes rather than donating it.
>The best thing for the doctor is to get paid (and pay taxes on) $400.
No...the best thing is for the doctor to not upset the insurance company and get dropped from their network and lose all their patients.
Remember the famous line if you like your insurance/doctor you can keep your insurance/doctor. Turns out the president has no control over whether insurance will outright drop doctors from their networks.
As to your point on accounting, it simply depends on the doctors/hospitals accounting practices. It’s possible there is no deduction as you say (no big deal to the doctor, they got paid their fee anyway) or they can use an actual method of accounting and carry the loss forward.
In fact you may be understating it a bit. If the doctor uses cash accounting, then it's not that the $300 deduction is of no value, there is no $300 tax deduction.
As you point out, a cash basis taxpayer pays taxes on actual income received. Money you may have hoped to receive but didn't isn't income, so there is no tax and no deduction related to it.
If the doctor filed taxes using the accrual accounting method it would be different.
As I mention to a number of other comments...it simply depends on the accounting method.
It can be waived (not treated as income at all as you say) or it can be treated as income (taxes paid) and the loss carried forward for future deduction.
> Johnny probably cares about the charity or at least looking good in the community, because he'd have a larger net worth if he just sucked it up and paid taxes rather than donating it.
You are assuming that Johnny isn't the one that doesn't understand tax deductions.
The only way the doctor would get a $300 deduction is if they use accrual accounting and had already reported the $400 as taxable income. It's isn't a free deduction that comes out of nowhere.
With accrual, you report income when you bill for it, not when you receive it. Suppose you treat a patient on December 31 and bill the insurance $400 on same day. You report the $400 as income and pay taxes for the entire $400 in that year.
The next year, insurance only pays $100, so now you have a $300 loss to report in the new year. But you only have this loss because you've already reported the $300 as income.
If the doctor uses cash accounting, there would not be a $400 income entry on December. There wouldn't be any income to report until they are actually paid, and then the income is the actual amount they are paid, $100.
There is no opportunity cost deduction. Unless the doctor can show that he is losing money (amortized cost of office/staff overhead etc) on that $100 service, there is no deduction. They can't arbitrarily say they sell their services for a certain amount and deduct when they don't reach that amount.
If you have a widget that cost $50 to make/market/sell and you sell it for $100, then have a "sale" or "friends and family" discount to $60, you don't get to write $40 off your taxes. If you sold it for $40 you could write the $10 loss off of your taxes.
Just to add one more note to this lengthy thread... :-)
> Dr. gets his $100 for the visit and gets a $300 tax deduction
I think that is the phrase all of us have been jumping on. What you wrote there is simply not true. There is no scenario, regardless of whether the doctor uses cash or accrual accounting, where they get $100 for the visit and a $300 tax deduction.
There are three possible situations here:
1. Doctor uses cash accounting. The $400 invoice is not a taxable transaction. Doctor gets paid $100, reports it as income in the year it is paid, and that's that. There is no $300 deduction.
2. Doctor uses accrual accounting and is paid the same year. They report $400 of income along with a $300 loss in that year. Net income is $100, and doctor pays taxes on the $100 income. Their tax for this transaction is exactly the same as if they had used cash accounting.
3. Doctor uses accrual accounting and is paid in a subsequent year. They report $400 of income in the first year and pay taxes on the entire $400. Then, in the year they get paid, they report a $300 loss, because they were only paid $100 out of the $400 they previously declared as income. The only reason this $300 loss exists is that they already reported the entire $400 as income in the previous year and paid taxes on it. They aren't getting $100 income and a $300 deduction, they got $400 income in one year and a $300 deduction in a subsequent year.
As you mentioned in another comment, there may be reasons why a doctor would want to do this. Perhaps they just started their practice and are in a lower income bracket this year but expect to be in a higher bracket next year. In that situation the accrual method may help balance their income across those two years: they can pay taxes on the accrued (billed) income in the year that their tax rate is lower, and then take the loss in the next year at a higher tax bracket.
There may be other reasons to do this as well, but none of them change the fact that accrual accounting would mean they reported $400 in income along with the $300 loss, whichever years those happen to be.
It's not $100 in income combined with a $300 deduction, whichever way you account for it.
There is certainly a difference between a list price and a negotiated rate, but there isn't some sort of secret "we'll tell the patient in writing we're paying $400, but actually we'll pay you nothing" rate.
That’s insurance based healthcare in a nutshell. Insurance doesn’t negotiate just rates but the actual reimbursements.
The real fraud is the fact that insurance companies have been buying up health care practices/hospital systems and dropping all other providers from their networks and forcing the patients to go to the insurance owned providers (often times unbeknownst to the patients). Although there have been a couple successful large class actions by both doctors (who got dropped) and patients as well, but this hasn’t changed anything in practice just provided a little hush money.
I dont think that deduction idea makes sense. You would have had to actually report the income of the 400, pay taxes on that, and then deduct the next year. Unless there is trickery involved I'm not savvy of.
That’s exactly how it’s done under accrued accounting. And in health care paying taxes on uncollected Billings and carrying the loses forward can make a lot of financial sense.
> gets their 80% waived by the provider effectively shifting 100% of the cost to the patient while still being able to account for the 80/20 split on the books
On a macro scale, healthcare prices are a huge issue. On a micro scale, healthcare prices are a non-issue.
Perhaps the latter is part of what leads to the former, and perhaps full disclosure will change things, but generally there has been no point in even trying to shop around based on price, since there are no good options and very little information about prices.
What is the “micro scale” you’re referring to where healthcare prices are a non-issue? Medical bankruptcies are a pretty conspicuous problem in the United States.
I'm sick, I need to go to the doctor. In the USA, good luck figuring out how the price of anything in any way should affect the choices one makes at that moment.
Is there a difference between going to the CareNow clinic near my house or the Code3ER near my house? I have no idea. Should I go to a hospital instead? Is that cheaper or more expensive? I have no idea. Once I get there, are things going to cost me more or less depending on which arbitrary doctor I end up with? I have no idea. If they order further tests or a consult with someone else or some medicine I've never heard of, do I have the ability there to ask questions about price? No, I've tried. Doctors genuinely seem to have no idea whatsoever what things cost, by and large.
So at that scale, not the big picture but the individual scale, prices don't matter because if they did, I'd just stay home and hope I live through whatever ails me. Which is often what I do, in fact.
I hope forcing publication of prices makes a difference. I'm suspicious that companies will find a way to do so that protects their profits, but hey, I'm hopeful.
As for the physicians and pricing - I have some sympathy there. First, I'm happy that they are not making medical decisions based on overall price but instead based on risk. This seems to be the best way to treat me the patient and not me the line item.
That said, they also have to deal with liability (especially in an ER) so they have to treat any POSSIBLE thing that you might have before you leave since people often arrive with zero medical history and they have to rule out side effect things that may not be an issue. Further, the fact that their physicians often deal with advanced specialities and/or emergency medicine means you're paying for a specialty for something that could be simple. I try to stay out of ERs unless I'm worried about my life and instead use urgent care / clinic visits when my GP is not available. Their billing seems to be much more consistent, anyway, and there's less risk a physician won't be covered by your insurance just happening to stop by.
They are there but you more than likely don’t know anyone personally that has done it. Most people have insurance via group plans and don’t get that sick, it is the outliers that have huge problems. That is what makes the problem so hard to get people fired up about.
Forgive my perhaps being out of touch, but isn't the primary complaint that healthcare can be _ruinously expensive_ and unaccountable?