Cap the price tag a medical establishment can charge you to 10% (percent) of your income after taxes or your AGI for that year (adjusted gross income) as seen on an individual's 1040. And since medical bills are not instant (for me it takes about 4-6 months to get a bill) so this then can be easily tied to an annual tax return. What I mean is medical thing happens to me, I get the bill in about 5 months after the memory has somewhat faded. Even with Medicare and insurance the bill is still hundreds of dollars. So based on my tax return, the max they could charge me would be about X00 dollars. That’s based off last year. You could also send the bill, and then adjust it based off when the current year tax return.
Since people with serious medical problems are adversely affected by not being able to be fully employed this would give them relief (as well as other people of limited financial means).
Hospitals would still be able to generate income. In addition if you keep the medical deductions intact (even without changing it) you would give people an incentive to pay their medical bills...which should mean more revenue for the hospitals and other medical establishments.
To those that do not have to file taxes...this will give you a reason to file them. It’s not without precedence...when the government sent out 400 (800 if MFJ...Married Filing jointly) as a stimulus, it was tied to people's tax returns. If you didn't file a tax return, you didn't get the money. This meant a lot more people filed tax returns.
Of course what do you do when someone doesn't file or can't file a tax return? Does that mean they aren't eligible for the cap....I'm open to that honestly...I don't particularly have a preference on this particular issue so I'm open to other ideas to handle this particular issue. Right now my thoughts is the cap wouldn’t apply to these people, and hospitals can charge them whatever they want…or however they charge them now would be applicable.
Also does that mean you can only be charged 10% in total or can each establishment (doctor office, hospital, clinic, lab, and ETC) each charge a max of 10% of your income? Well to be fair I suppose it would have to be each organization. I would then say that you would then see a move where more people would try to do their entire medical stuff in ONE place. It would take time since a lot of the medical industry is somewhat spread out.
You would also have the issue of a person having to share their tax return with the medical establishment. While I see that some people might have a problem with this (ok a lot of people might have an issue with this)...it’s not any different than say the government or the hospital having a centralized database where all your information (ALL of it) is kept. This seems a bit smaller and controlled than such a database.
I'm sure fake tax returns would become an issue...but I don't see the IRS being defunded anytime soon, they can verify an actual tax return, and might actually generate some revenue out of it...verifying a tax return could be a legitimate business for them.
Next issue would be whose tax return you use. Obviously you use the patient’s…but what if that patient is a minor…or with the potential new law 26 or under and living with their parents?
On one hand the fair answer is the parents…which probably the parents make more than the child (even 21-26 range) so they’d probably prefer the cap to be based off the child’s tax return. Of course the issue can reverse itself say if an adult is taking care of his elderly parents. Again I don’t have a preference here, so I’m open to suggestions. Should it be a choice, if so whose choice, or should this already be pre-established?
The next question would have to be what happens to health insurance, and Medicare. These things pay for medical bills, but if medical bills are capped to individuals to 10% of whatever their yearly income is...that means they would have to pay less? It seems like it. That sounds like a good thing...or it could mean that since medical expenses might be more affordable then only people who make a lot of money would even bother with insurance...again while that might shrink the insurance industry I'm not seeing that as particularly negative. Ok we lose some jobs, but if they aren't needed anymore, then what do you want?
And then what do you do with people who don’t make money…legitimately? Their cap would be 0, so even if they had insurance that insurance would then argue they shouldn’t pay anything because the kid’s cap is 0. That creates an incentive to make as little money as possible…which is not a good thing for society. I suppose you could make the case that ALL income should be looked at for this calculation (including any other benefits a given person receives like food stamps as example)…however not all income goes into your income for tax purposes. Either you’d have to change the tax code, or develop a completely new form for people to use and then either give the responsibility to an already established federal organization or make a new one. I’m going with the IRS because they already track income and are responsible for making sure tax returns are correct and accurate. It’s already in their job description.
The price tag itself might come into play, so let me reiterate the idea.
A medical establishment would be capped to charging you PER YEAR up to 10% of the income you make in that particular year.
We all have heard of people going bankrupt because of medical reasons…this addresses that. We all know revenue is an issue with hospitals and probably other medical establishments…this give them something to still generate income. We know that prices are as high as they are because hospitals try to get as much money out of insurance and Medicare as possible, but then they can’t legally charge people without insurance or Medicare a different price…this addresses that. Would there be issues with the medical landscape being laid out as is…yes, but things can change if we develop things in a slow and methodical way.
There is also debate over the actual % to use and what number to base that percentage on. Should we instead use total income from the tax return, should we use something where ALL income is used (not necessarily the same as your tax return) or should we use something smaller like your AGI or your taxable income?
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