Government has been a major factor in increasing health care prices.  It increases the prices everyone else pays to health service providers through cost-shifting, and it increases the taxes we must pay to offset the subsidies it ladles out to its favored beneficiaries.

Government demands huge “take-it or leave-it” discounts from physicians and hospitals for the services given to Medicaid and Medicare patients.  This has been going on for decades.  The health service providers recover those discounts by jacking up the “rack rates” paid by individuals and hiking the “wholesale rates” paid by big insurance companies.

E.g. in July 2011, a Medicare beneficiary went to a clinic with severe flu symptoms.  The clinic charged $212.00 for services (its rack rate).  Medicare offered $129.33 which the clinic accepted (39% discount).  The patient’s Medicare “gap insurance” paid another $32.33 (15% of total).  The patient paid nothing.

E.g. in another clinic, in July 2011, the same patient was charged a rack rate of $140.00 Medicare paid $82.62 (41% discount) and the “gap insurance” paid 20.66 (15% of total).

For those who pay nothing for health care, Government’s cost-shifting may feel benign.  For everyone else it means higher out of pocket costs.  In the proposal, government is entitled to a volume discount geared to any documented efficiency it delivers (in administration) for the service providers – but it is not entitled to discounts related to its powers of clout and retribution (interactions with IRS, FDA, DoJ).  Government cost-shifting should be limited to documented efficiency.  Likewise, insurance company discounts should not exceed the efficiency they deliver to providers.   These proposed “green eyeshade” measures will decrease the prices that consumers pay directly.

Malpractice lawsuits are a massive waste of the health care dollar.  Tort lawsuits cost 1% of health spending ($27 billion per year) and are responsible for another 4.7% ($124 billion/year) in “defensive” medicine.  “Defensive medicine” is the ordering of extra tests and procedures that are not required by the patient’s condition but are required to insulate the physician from accusations of medical malpractice or inadequate treatment.  Malpractice attorney talking-points include platitudes about making health treatment safer, but clearly their aim is to become very rich on their 1/3^rd share of lawsuit winnings.  While victims of inappropriate treatment should have a right to sue, awards should be limited to actual damages, court costs (the loser pays) and a cap on pain and suffering (e.g. $100,000 or less).  So far, politicians have not restrained the cottage industry of trial attorneys.

In the proposal, legislators must scrap the malpractice gravy train (cap on pain and suffering, and loser pays court costs), and physicians are not off the hook.  They need to stop wasting 5% of health costs on CYA behaviors such as “defensive medicine,” and at the same time, physicians and hospitals need to address the 44,000-85,000 U.S. deaths of each year from iatrogenic illness, (illnesses acquired as a result of medical error, drug interactions, hospital–acquired infection, etc.).  The cost of iatrogenic illness treatment is $35 billion per year of imbedded costs borne by consumers.  ACA advocates claim 1.8 million of those injuries and 60,000 deaths could be averted.  But those adverse outcomes do not automatically justify invasion by the malpractice pirates.  Instead, the public deserves unbiased review by medically competent specialists.  There’s no value in the deeply emotional frenzy that malpractice attorneys whip up to influence judges and juries.

The AMA conducts medical peer reviews where skilled arbiters assess the care given to the patient.  If the AMA wants to retain its control over the practice of medicine and see malpractice suits brought under control, it needs to do more medical peer review, remove deficient practitioners and most of all, it should publicize the results.

Patents on pharmaceuticals and medical devices offer copycat protection to manufacturers who invested resources to invent or refine new technologies.  The patent allows manufacturers to set a higher than competitive price, but it is not a license to treat American consumers unfairly by setting a higher wholesale in the U.S. than they set for outside the U.S.  In this proposal, U.S. consumers should not be denied access to the lowest “high price” the manufacturer sets for an equal volume.  If the manufacturer refuses to offer U.S. consumers his best price, then the patent protection can be rescinded.  In the wake of patent protection loss, the consumers can benefit from another manufacturer making a competing “generic” version of the product.  The government does not need to set prices, nor should it grant pricing advantages to a firm that discriminates against U.S. consumers.

Electronic health records (EHR) are used by 35% of physicians now and will be the norm for documenting the patient’s treatment plan and history before the end of the decade.  In an EHR, handwriting-error is greatly reduced, medical coding and charging can be automated, and patient records are ready for consults on treatment.  Administration costs can be reduced through EHR, and the costs associated with pursuit of inappropriate treatment plans can be cut.   From EHR gear, there are additional benefits such as faster communication among treatment teams, coordination of referrals, and highly relevant in-service training for health professionals.  If EHRs are required for large institutions that participate in government-paid and insurance company-paid services, the uptake of EHRs can be accelerated and health care costs reduced.  Rand estimated $80 billion in yearly EHR cost savings, but recent studies say that some doctors order more tests because EHRs make that so easy to do – perhaps defensive medicine is showing its ugly head.

An aging U.S. population and the one-in-six who remain uninsured are increasing the demand for health services, but the supply of health professionals does not appear to be keeping pace.   The successful experience with nurse practitioners and other specialized non-physician health care providers suggests a way for the U.S. to add capacity to meet health care demands.  Widespread EHR availability should readily accommodate the physician “supervision” that the AMA arrogantly thinks is needed.  No doubt the AMA will see consumer benefits from increasing the supply of professionals.

And finally, the walk-in clinics sprouting up at Walmart and other big-box stores cut 30% to 40% off the cost of the same service rendered at a doctor’s office.  These clinics are often run by a nurse-practitioner.  Patients seem pleased with the service and delighted with the convenience.

The proposals above are intended to provoke discussion on ways to cut the cost of health care for consumers.  We welcome other perspectives that can promote the same goal.

Alan Daley is a retired businessman living in Colorado who follows public policy from a consumer’s perspective.

In the proposed system, a basic coverage policy is offered by each insurer.  The basic policy limits coverage to just that needed for the treatment of illness and injuries.  Advanced and esoteric services are offered in an optional “extended coverage” policy that some insurers might choose to offer.

In this proposal basic coverage includes: generic drugs, most medical and surgical services provided in a local clinic or general hospital setting; prenatal and childbirth; limited stay in psychiatric or addiction treatment or orthopedic rehabilitation facilities; and other common treatments for illness or injury.  The basic policy is the pathway to essential services and its limits and copays are the main defense against runaway costs.  Since drugs are a crucial part in the treatment of many illnesses and injuries, they are included in basic coverage.  Most drugs under patent protection are priced at nose-bleed levels in the U.S.   Despite some differences in efficacy, an illness can often be treated by either proprietary or generic drugs.  Since generic drugs are much cheaper, they are included in the proposed basic policy.

E.g. in 2011, at a Publix Pharmacy, 30 tablets of Crestor (under patent protection) cost $142.00 and 30 tablets of simvastatin (generic) cost $11.32.  Both are drugs for cholesterol control.

Despite widespread public disdain for ACA, some lobbyists still advocate coverage for every health service or lifestyle want and insist that the public should bear the cost even though they  cynically plead ignorance of the cost.  Long term care was dumped from the original ACA because it could not be made affordable.  At about $60,000 per year over the average stay of 3 years, long term care is unaffordable for most consumers who’d have to pay their own way.

At an insurer’s option, an extended coverage policy may be offered that includes: long term care; advanced reproductive interventions such as IVF; some proprietary drugs (those for which there are no generic drugs with similar curative powers); dentistry, vision and hearing care.     The aim is to make extended coverage as affordable and attractive as possible to people with more sophisticated wants and matching budget.  Beyond “extended,” some insurers may offer “designer” policies that include; a personal DNA map, tattoo removal, cosmetic surgeries, chronic psychiatric counseling and perhaps “new age” cures they find to be marketable.

Prices for medical services should be posted at the point of service delivery.  Those who feel this is crass probably have not had to pay the extortionate rack rates charged.   Some consumers are insulated from knowing the high cost of services they consume because someone else does the actual “paying.”  To force a conscious decision by the patient on whether the service is necessary, there should be a copay for each service delivered, and the copay should be more than just a token amount.

Prudent consumers should not be stuck with the costs of another person’s intentional misbehavior.   So for the cool kids who ride a motorcycle or bicycle or ski without helmet, drive an automobile without seatbelt, overdose on street drugs or alcohol, participate in fight-club, ride Niagara Falls in a barrel, or suffer injuries while committing a felony, the cost of getting patched up should be painfully theirs.  The Emergency Room copay charges for injury and illness due to those misbehaviors should be 100%.  The costs must not be tossed onto the backs of well-behaved consumers and taxpayers no matter how much the cool kids admire high risk behavior.

In the proposal, insurance policy prices (plus copays) should cover the actual services costs.  Policy premiums for each of the basic and extended coverage policies should reflect the insured party’s age (coarse strata such as 18 years or less versus 19 and older) and health condition (coarse strata such as standard risk versus higher risk).  Standard risk may include the lower two-thirds of the risk pool.  Higher risk may include the top third of the risk pool.  The high risk category is where many “pre-existing condition” consumers would be placed.  But, the “higher risk” boundary puts about 100 million people in the category so the premiums will be closer to “reasonable” than to “ridiculously high.”

Covering only the essential services, paying noticeable copays and being very aware of prices are proposal elements that drive costs down.  Paying for what we consume is a topic that tends to awaken our inner-Ayn Rand or inner-Karl Marx.  No doubt there will be strife over what copays are fair.  It is essential that the insurance prices cover actual costs – because that’s what helps align prudent behavior and lower costs.

Alan Daley is a retired businessman living in Colorado who follows public policy from a consumer’s perspective.

Today’s consumers are saddled with a $2.6 trillion health care system that we pay for directly in “out of pocket” installments, indirectly in current taxes and indirectly in future taxes that repay government borrowing for current needs.  The system is unaffordable and cost cutting must precede expanding coverage or new classes of beneficiaries.

The proposed cost-cutting ideas that follow are part of an integrated system that provides consumers with coverage for essential services including some that ACA omitted.

Who’s covered?  In the proposed system, most consumers will choose a health care policy from competing insurers and those policies will be paid for by the consumer or by the consumer’s employer – just as occurs today.  Some consumers will avoid insurance and pay practitioners directly.  Some beneficiaries (e.g. Medicare, Medicaid, or VA) will receive government-paid care.  In the proposed system, the government pays for its beneficiaries insurance bought from private insurers or the government may provide them with medical services directly (as does the VA).

In the proposed system, insurance coverage and who pays are similar to today’s arrangements, but costs are lowered through changes to:  the services covered, copays, health records, government cost-shifting, malpractice costs, drug pricing, and risk-based policy pricing.

In the proposed system, ideally, all consumers would sign up directly or their employer would pay for an insurer’s coverage policy.  An individual can sign up with an insurer from any state.  In some cases government will pay for health coverage.

Members of a family would be eligible individually for basic or basic and extended coverage. There is no “family price” per se.  A family could have parents and one child in the standard risk category and one child in the higher risk category.  Since pricing is per individual, the age of children in the parent’s home is irrelevant, all policies are individual policies.

In the proposed system, those who sign up for health care only after a skiing accident or car wreck (treat as pre-existing condition) are eligible for basic coverage, but if a new signup was not covered by a basic health policy for 91 of the last 180 days, then the minimum signup commitment is 4 years.  This open-entry makes for portable coverage in that anyone can sign up for a basic policy anytime, most preferentially within a few months of dropping coverage elsewhere.   Extended coverage policies are available to anyone who meets the underwriting requirements of the insurer.  A newly motivated skiing victim would make a terrible cost burden for any extended coverage carrier and may be deemed ineligible.

A few lobbyists want health coverage offered for 11 million illegal residents at the public’s expense, but coverage for illegals should require explicit prior approval by a majority of state voters.  The federal government should limit itself to providing basic coverage and only for those American residents as authorized in federal statutes – no new entitlements.

The federal government made longstanding commitments for health care coverage to armed forces veterans, social security tax payers and their dependents, and to those incarcerated.  Recently bureaucrats have extended health coverage to many others, often through games such making a political choice of where poverty “starts.”  While politicians may get a thrill from minting new classes of entitlement among potential voters, other people’s money and patience is now officially depleted.  So a hard edged moratorium is needed – no more additional commitments of federal government-paid health coverage.  Where federal government-paid coverage is in place, it should be set at the basic coverage level.  Congress, not politically appointed bureaucrats, must be in charge of and on the record for “where poverty starts”.

Everyone can be covered, especially if they pay the health policy premium.  This proposal treats everyone as an individual, allowing basic coverage to those with pre-existing conditions; limiting federal Government-paid coverage to Medicare, Medicaid, and VA beneficiaries, and to those that the voters authorize.  In the next part, the service coverage is proposed.

Alan Daley is a retired businessman living in Colorado who follows public policy from a consumer’s perspective.

The public’s verdicts on ACA are not aligned along a single dimension.  Some people dislike government intrusion in health care; some feel ACA is unfair to them.  Most know that the politicians sculpting ACA ignored “low total cost”- an irresistible theme for consumers.  ACA will foster a health system with major omissions and only a token effort to control costs.

In the short life of the ACA, misstatements on cost have been pathetic.  Originally, ACA was touted to reduce the federal deficit by $143B over 10 years.  But when the long term care component of ACA was found to be a financial impossibility, the $70 billion in premiums had to be backed out of the scoring.  The President’s fiscal 2013 budget proposal included an additional $111B for premium subsidy shortfalls in the ACA.  That made it a quarter trillion dollars uglier than when we were first allowed to read it.

U.S. Health Care expenditures in 2010 were $2.6 trillion.  There were 121 million “consumer units” (families and singles) in 2010, so total health care spending per consumer unit was a heart-stopping $21,470.  But the 2010 “out of pocket” per consumer unit was just $3,157.   Although they don’t realize it, most consumers are deeply insulated from the full costs of health care.  Since the average U.S. consumer unit has pre-tax earnings of $62,490, the full cost of health care would be a crushing 34% of a typical consumer unit’s earnings, not just the 5% “out of pocket.”  Most of the U.S. health care costs are paid directly by government, employers, insurance companies or other entities.

The ACA pandered to some voters with its consumer premium subsidies, but it tried to hide the total costs from the majority of consumers.   The constitutionality of ACA is currently being scrutinized by the Supreme Court.  We expect a ruling in June 2012, but many assume that the ACA will be ruled unconstitutional or have its individual mandate ruled unconstitutional.  In either case it would become unworkable, and Americans need replacement legislation that better serves their health care needs and budgets.  In the segment that follows, we will look at some ideas that can reduce total health care costs and provide consumers with coverage for essential services that ACA omitted.  These recommendations are presented as parts of an integrated system.

Alan Daley is a retired businessman living in Colorado who follows public policy from a consumer’s perspective.

Many communities have experimented with municipal broadband over the years.  I’ve detailed many of them in the past, including the towns of Mooresville and Davidson, North Carolina, who borrowed $92 million to finance the purchase of an ailing broadband Internet provider. After spending taxpayer dollars on this program, the city found itself having to borrow even more, while struggling to keep up with the pace of new technology and upgrading the required infrastructure.  Reason and Americans for Tax Reform, as well as one ACI scholar, have detailed more failures in public financed broadband.  Municipal broadband programs have proven to be such a failure that 20 states have passed laws against publicly financed broadband programs.

Although many states have banned the practice of municipal broadband, NTU’s new study shows that many governments still have an appetite for it.  Just last year, more than 100 networks were built or being built in 33 different states. The study goes on to show some of the costs associated with the failed broadband plans:

The hidden costs to taxpayers from municipal broadband are considerable and growing ominously. Annual debt service costs for nine broadband networks in Tennessee have risen from just over $100,000 in 2001 to nearly $12 million in 2010. Last month, one sponsoring entity of this project, Chattanooga’s Electric Power Board, faced a downgrade in its debt in part due to concerns over the reliability of its revenue stream from cable and Internet operations. In Utah, the “UTOPIA” network’s $202 million debt is four times larger than the combined general obligation debt of its 11 member cities (general obligation debt is commonly used to finance municipal infrastructure).

Municipal broadband networks can also be poor investments. Despite a business model built on leasing broadband “backbone” as opposed to providing actual service, Memphis Networx failed to turn a profit and was sold at a loss of over $27 million.  A somewhat similar arrangement in Burlington, Vermont, led to $17 million of unpaid funds to its parent city, along with allegations of fiscal malfeasance.  In places such as Lompoc, California and Marietta, Georgia, subscription rates have fallen short of break-even targets by 50 percent or more, stranding taxpayers with operating liabilities.

The idea of universal access to broadband Internet is good, but its implementation by government entities often has the opposite of its intended effect.  Government-owned broadband networks almost always operate at a loss, see more service interruptions, and generally have fewer satisfied customers than their private counterparts.  Private enterprise can generally enter the market and provide reliable and cheaper service for consumers, and not saddle taxpayers with an overwhelming debt, as the NTU study has shown often happens.

There could be a better way to ensure high-speed Internet to more consumers—open up more spectrum and allow for an environment where private industry can provide Internet to consumers at an affordable rate.  By financing public Internet, governments are often saddling citizens with hidden costs and debt under the guise of “free” Internet.

Zack Christenson writes on digital policy issues for the American Consumer Institute at www.theamericanconsumer.org.

The Tennessee Valley Authority’s (TVA) assets probably should be unwound and sold off, as David Frum has suggested. Although the TVA receives no taxpayer money, its hard to imagine that the moving parts of a privately run TVA would not be more efficient and lower cost than the current government-run system. At the very least, a privately held corporation would have some actual accountability. The TVA  is “not scrutinized by shareholders and, unlike traditional government agencies, it is self-funded, so it doesn’t have to justify itself to Congress to win annual appropriations.” The result? Last year, a TVA screw-up resulted in dumping “5.4 million cubic yards of waterlogged fly-ash” in the Emory River.

The TVA is the nation’s largest public utility. It provides power to 9 million Americans. And those 9 million Americans deserve power generation that gets them the most efficient, welfare-enhancing treatment.

The half-in/half-out approach of no Congressional appropriation oversight, mixed in with all of the effectiveness of a not-for-profit, Federal government-protected corporation simply screams inefficiency. Maybe the TVA is not in the same precarious position as the currently broke U.S. Postal Service, but there is no reason why the bulk of TVA assets: its dams, hydroelectric facilities, and power plants could not be auctioned off to the highest bidder.

Of course, getting rid of the TVA could be a precarious position for some members of Congress. When Senator Barry Goldwater ran for President in 1964, he included TVA privatization on his platform. For this, one voter reported that she could not vote for Goldwater because the Republican nominee planned to get rid of her TV. (This is not a winning position in America, even with the advent of cheap Hulu on the laptop or iPod.)

Oh well. At the very least, perhaps the TVA-run solar panels at Cocke County High School in Newport, Tennessee could be devolved away from Federal administration.

Zac Morgan is a law student at George Mason University and writes for the American Consumer Institute

The United States Postal Service has existed, in one form or another, since the birth of the constitutional republic. Rethinking the very need for the Federal postal monopoly may seem a bit odd, if only because the service has become ingrained in our collective memory as one of those things that have always been there and always will be there. The fact of the matter is that there is no longer any pressing need for a postal monopoly. In fact, the monopoly has simply become so bloated and mismanaged, that either service cuts or a Federal bailout of the government-sponsored enterprise of the USPS will be on the table without a move to privatization.

The Internet revolution has dramatically decreased the need for the USPS. Most consumers and businesses conduct many communications through text messaging and email that would have necessitated a mailing just twenty years ago. (A contract, for instance, can now be turned into a PDF and emailed to a client, rather than snail mailed.) In 2011, 167 billion pieces of mail were sent, a drop-off of 22 percent from 2006. By 2020, the number may drop even further, to 118 billion.  Thanks to electronic filings, Tax Day came and went without all of the lines.  Consumer pay bills on line and may get their checks via ETF.  Consumers keep in touch with email and social websites like Facebook.

Meanwhile, the postal service’s heavily unionized work force, as well as generous mandatory pensions to USPS employees continue to bleed more and more tax dollars; without any marked improvement in services for mail recipients. In fact, the bloated budgets have only caused talk of scaling back services, such as killing Saturday mail delivery.

Does anyone really think that FedEx, UPS, or other private carriers would be entirely unable to step in and fill the void left if we eliminated the postal service and sold off its assets? Germany, in their quest to make a more efficient, leaner postal service actually sold off all but 24 of nearly 29,000 post office buildings.

At a minimum, the Congress should formally repeal the monopoly on first and third class mail and sell off more of its facilities to competitors, contract out certain services, and let market forces compete with the post office. After all, it’s not as if the Postal Service GSE is chronically bleeding billions of dollars or anything. (Oh. Wait.)

The next ten years are going to a very, well, pinched time for America. The government needs to do whatever it can to ensure that it runs a tight ship that maximizes consumer welfare. Relying on the ineffectiveness of a vastly unionized, bloated, red-ink spilling Federally-sponsored postal monopoly will simply harms consumers in the end.

Zack Morgan writes for the American Consumer Institute and is studying Law at George Mason University

The table below shows major sources of consumer income, the number of Americans receiving payments from the source, and the average annual payment to recipients.   

Sources notes: Employee compensation is from 2011 BEA National Income.  Proprietor, interest, rents, and dividend income are from 2009 IRS Statistics.  Social Security and Medicare headcounts are from 2011 SSA and Kaiser Family Health, respectively, while their dollar totals are from BEA National Income.  Medicaid dollars are from BEA National Income and the headcount is from a CNN Money estimate.  Unemployment insurance dollars are from BEA National Income, and headcount is from Dept of Labor.  Supplemental Nutrition Assistance Program (SNAP, aka Food Stamps) is from USDA.

In 2011, employee salary, wages, and benefits were $8.4 trillion and proprietor income was $1.1 trillion in 2009.   The number of employees grew by 1.5 million to 140.8 million at year end 2011.  The number of proprietors was 25.2 million at the end of 2009.    Unemployment has dropped from more than 10% to 8.4% but 5 million people left the labor force during the Oct. 2007 to Dec. 2011 period and 8 million work part-time because they cannot find fulltime work.  

Many retirees worked hard to accumulate assets that could produce retirement income, rather than rely entirely on government for income.  As a result, the average retiree is neither a 1%-er nor destitute, but somewhere in the middle.  The net worth of all retirees (median value in 2002) was $455,000 with $125,000 tied up in home equity, leaving $330,000 for income and other assets.  But in the last 3 years, the interest yields from annuities, CDs, muni- and investment-grade bonds did not match retirement plan expectations.   Most had to reallocate their portfolios to riskier assets; dividend producing stocks and junk bonds.  The income from rents, interest, and dividends claimed on IRS 1040 returns by 9 million, 21 million, and 15 million people resp. often goes to small business owners and moderate income retirees, and not just to the rich that our populist politicians vilify.     

Employee and proprietor compensation, rents, capital gains, dividends and interest are the easy pickings that politicians will seize for government tax revenues.  The President’s Fiscal Year 2013 Budget Proposal, calls for more limits on personal deductions and higher marginal rates.  The budget shows annual personal income tax receipts increasing by 103% or 7.4% compound growth in the decade FY 2013 to FY 2022.  In that decade, corporate income taxes increase 78%, or 6.0% compound growth.   The steep personal tax ramp is at odds with any assertion that only those earning above $200,000 (singles) or $250,000 (couples) will see tax increases.  In the President’s plan for personal income tax:

• Capital gains tax would jump from 15% to 20%
• Dividend taxes jump from 15% to ordinary income tax rates (up to 39.6%)
• Medicare contributions double to 3.8% of income
• For those in 33% and above tax brackets, the tax benefit of deductions reduces by 20% for home mortgage interest, charitable contributions, tax-exempt interest on municipal bonds, employer payments for health insurance, contributions to 401(k) accounts, traditional IRAs, and health savings accounts.

A decade of 7.4% increases in personal tax payments would be harsh, but mitigated if income increased at the same pace.  No one that we can find is suggesting that.  During 2011, wage rates grew by 2.7% for production and non-supervisory workers.  And, long term income growth and inflation are likely to offset each other to produce a 0.8% real income growth – which means the annual 7.4% tax increase will be painful.   

Fidelity Investments assessed how likely it is that the President’s proposed tax hikes will be imposed.  It concluded that both parties know passage is unlikely in the short run and ultimately it depends on who controls the Congress and White House after the election.   Any consumer who wants some control over his or her income security has a big stake in that outcome.

Alan Daley is a retired businessman living in Colorado.  He follows public policy from the consumer’s perspective.

The key question behind health care issues has become; who should pay?   In the U.S., the answer has become political with emotional, vote-buying, and coercive attributes.  And because they can, politicians have entangled “best treatments” and “who pays.”

Budgetary pressures in states such as Illinois, Tennessee, Iowa and Washington are motivating changes in Medicaid payments.  For Medicaid patients in Washington State, there is a list of 500 diagnoses for which the state will not pay doctors and hospitals.  Some are routine care conditions that should not waste ER resources.  But in some instances, a test needs to be done to establish a diagnosis.

In Washington State, if a Medicaid patient falls down a staircase and arrives with a swollen ankle,  an x-Ray may be needed to establish whether it’s broken (Medicaid will pay) or not (Medicaid will not pay).  Washington State standard takes additional uncompensated care from the doctor and hospital and some will think twice about ordering an x-Ray.  Going forward, a higher percentage of Medicaid patients who need broken ankle treatment will be sent home without it and more physicians will face malpractice suits by major contributors to politicians’ election campaigns.

Normally, when you spot a government-rigged game such as that in Washington State, you can refuse to play.  But that’s not an option for emergency rooms and physicians.  The federal Emergency Medical Treatment and Labor Act requires a hospital to provide a medical screening assessment to anyone who requests it, and if the person has an emergency medical condition the hospital must stabilize it or transfer the patient to another hospital that can.

The medical professions and consumers are being victimized by our politicians.  State-level Medicaid shakedowns are being monitored by the feds for effectiveness – no doubt as part of a cost saving model for all consumers under the Affordable Care Act.

Alan Daley is a retired businessman living in Colorado.  He follows public policy from the consumer’s perspective.

Currently, there are no guidelines or rules for how these digital goods are taxed, and what jurisdictions have the right to tax them. So right now you could potentially be taxed in a variety of different ways when purchasing digital goods. Let’s say for example you download a movie from Amazon. You might live in Chicago, Amazon is headquartered in California, and maybe their servers from which the download originated are located in Oregon. Which state is able to levy a tax? It’s not completely clear. Right now, theoretically, all three states and the respective municipalities might be able to levy a tax on that download, hitting the consumer with a huge tax bill through multiple tax jurisdictions. 

The question arises, of course, over why digital items need to be taxed at all. Tangible products, like those purchased from Amazon, aren’t levied a tax. And as we showed in previous posts, the app economy is booming, and creating thousands of new jobs. Would imposing more taxes on these digital goods hamper the growth and innovation we’ve seen in this sector?

Many groups are urging action on this issue. Americans for Tax Reform (ATR), a free-market advocacy group, points out that the issue of taxing digital goods can often put states at a competitive disadvantage. Some states are exempting digital goods from taxation, while others are imposing it. Taxing digital goods can often discourage high tech startups from locating to a particular area, which according to ATR, is why states like Ohio, Minnesota, and California have all rejected imposing digital taxes. The Download Fairness Coalition is a group hoping to take away some of this disparity. They’ve proposed Congress enact a framework that would set guidelines for which states are allowed to tax digital goods.  The lack of a national framework for how items are taxed could be hampering e-commerce, according to the group.

Congress could soon act on the proposed guidelines. A bipartisan bill has been introduced into both chambers of Congress. Known as The Digital Goods and Services Tax Fairness Act, it’s sponsored by Senators Thune (R-SD) and Wyden (D-OR) in the Senate, and Congressman Lamar Smith (R-TX) and Congressman Steve Cohen (D-TN) in the House. There’s a chance the Senate could be moving on this bill as soon as mid-March. There’s a lot riding on the digital economy—the thousands of jobs being created, the commerce that’s taking place that’s helping to drive the economy—so Congress must be eager to act. The bill would attempt to identify which states or entities would have the power to tax these digital goods, along with other measures meant to clarify and ease the regulatory burden on many e-commerce companies. When unemployment is still hovering above 8%, Congress must feel compelled to act, as the digital economy is one of the few bright spots in an otherwise dismal array of industries feeling the pain of the poor economy.

Zack Christenson writes on digital and tech issues for the American Consumer Institute