Dr. Ostrovsky get is Right

medGadget, a site well known for medical gadget and industry news, is not predisposed to the rant.  As a matter of fact, I think this is their first.

And it’s Dead On:

Medgadget weblogYour correspondent, a double boarded practicing clinician, just doesn’t get it. California governator Arnold Schwarzenegger comes out swinging with a proposal to tax MDs 2% off their income to finance insurance scheme for all. From few, to all: just like in the Soviet Union.

That’s just the warm up, Dr. Ostrovsky is on a roll. 



  1. Now I admit that I haven’t done the math on this one, or read the details of the plan, so I may be ignorant.


    Isn’t this a potential win for physicians? I mean, yeah, there’s a lot not to like in this plan. but it preserves a role for private insurers and doesn’t impose single payors and price controls, and it covers everybody, at least in theory. for me, it’s a trade-off that makes sense.

    For example — if I am an ER doc hypothetically making $200K, I pay a $4,000 “tax” into this (which I presume will reduce my federal income tax liability). But as an ER doc, 19% of my patients are uninsured and pay me NOTHING as it is. So if those folks are compelled to get insurance, I recover anywhere from $10,000-40,000 in extra reimbursement.

    I think there may be a lot to criticize, not least the question of “Will it work?” But from the physician’s point of view, I’m feeling somewhere between wary and optimistic, not immediately opposed to it.

    Maybe someone can educate me otherwise.

  2. From the article:
    “…Schwarzenegger comes out swinging with a proposal to tax MDs 2% off their income to finance insurance scheme for all.”

    Amazing. Reports where I live neglected to mention this.

    Dearest shadowfax,

    I’m not a practicing physician (see username), but I would assume that this would only be a short sighted answer to a much bigger problem. It starts with 2%. Once the ability to tax is there, it is very easy to increase it.
    Even 2% is un-american.
    We have tax dollars going to free clinics and hospitals for those who do not have coverage. The hospial where I work does not have this. There is a hospital damn near down the street that does. Yet people show up in the ED I work in because they do not feel like waiting. They KNOW this hospital is funded for those in their situation, yet they do not utilize it. Their impatience for their mild cold symptoms hit the pockets of other patients, and x2 for doctors (who pay county taxes and then aren’t paid for services rendered).
    A doctor I worked with on a particular day was much farther “under the weather” than many who were in the ED. He took some vitamins and drank orange juice to get over it.

  3. Type-B is right. There was a time when the vast majority of Americans were deeply opposed to income tax. It was considered absurd and un-American. Once you decide it’s okay to leverage an extra tax just because we’ve chosen this profession, there is no logical end.

  4. Hmm. I think we may shoot ourselves in the foot if vague “slippery slope” arguments cause us to oppose a plan which might have a return on investment of 100-1000%. If there’s a math error or some conceptual point that makes my analysis wrong, fill me in.

    I would rather this national crisis (the uninsured) be solved with someone else’s money and by some other method — public financing or free market competition, or something else. There are some good proposals out there to that effect. But understanding that in politics you can’t let the perfect be the enemy of the good, recognize that this proposal is on the table and not subject to amendment, and seems likely to benefit consumers *and* benefit us as physicians. So why not chip in a little when the net effect on our practices is likely to be a positive?

  5. We had something like this in KY for a time, and rightfully so, it was eventually declared unconstitutional. And it was on “gross receipts” not income after taxes and overhead, so it was quite egregious.
    What it really represents is another way of going after physicians. If it’s “necessary” to have some special tax, then it should be a tax on everyone, not just a segment of the population. The alleged reason why physicians were singled out was that we were the ones benefiting from this. Of course, that didn’t make it any easier to get paid for treating Medicaid patients.

  6. TheNewGuy says:

    That’s hilarious…

    45% of my practice is ‘caid or self-pay, of which we see little reimbursement (if at all). Then, I pay 40-50% of my income in taxes after I actually DO get paid. On the whole, I’m actually taking home income from about 30% of the actual work I do… and I’m not paying enough?

    They really think that 2% is going to generate enough revenue? What planet are these guys on where it’s economically feasible to balance the healthcare budget on the backs of the docs? (our salaries aren’t anywhere close to the lion’s share of the total healthcare pie).

    It’s a shame that we have so many class-envy voters who think the answer to the healthcare problem is soaking the “rich doctors.”

  7. It is great fun, is it not — great catharsis — to go all ballistic on a proposal you have no understanding of? I carry no water for this one — Schwarzenegger’s — but the comments show so little understanding of what’s actually in his Republican plan (EVERYbody, including hospitals, insurers, taxpayers and those who’re being covered by the mandatory insurance through copays and premiums is contributing to a pool which has benefits for everybody [unless public health and not getting AIDS or TB from the walking-around uninsured are not worth your tax dollars] not just poor victimized doctors) that’s it’s laughable. Dr. Ostrowski may perhaps know better, and if so is pretty close to beneath contempt. The rest of the comments, except for shadowfax’s, are at best pathetically ill informed.

  8. Please inform us dullards!

  9. TheNewGuy says:

    Is that all you’ve got, Mr. Weber?

    What a pity… an opportunity to educate and persuade the very deliverers of health care missed; drowned out by your own arrogance and condescension. Your website seems to indicate that you’re an award-winning author in the health care policy field… I’ll be charitable and assume that the dismissive snark you left above is not your finest work.

    Shadowfax’s original post said he hadn’t read the plan, yet the rest of us are the only “pathetically ill informed” members of this forum? Let me take a wild guess here: You’re slagging the rest of us and crediting Shadowfax because he agrees with you in potentially supporting this plan. Because clearly, and by his own admission, he isn’t any better informed.

  10. Hey, it’s kind of the point that I haven’t read it either. Who has? And what difference does it make, since it’s still subject to processing out of all recognition in the sausage machine of the state legislature? Nevertheless, having the advantage of living in California, I’ve heard discussions, by both Ah-nold himself and the plan’s chief author, of how it’s supposed to work. I do not favor it — in fact, I think it’s pretty weak insofar as it would serve as the Health Insurers Guaranteed Prosperity Act of 2007. And I can’t figure out how mandating that everyone buy health insurance would work any better than the present mandate that everyone buy auto insurance. How’s that one going again?

    Before getting all up in arms, though, because doctors would be asked to join in contributing a little bit — in return for increased Medi-Cal rates and $10-$15 billion in new money to hospitals and doctors, according to the plan’s authors — shouldn’t one do at least a little homework? Try this link: http://gov.ca.gov/index.php?/press-release/5057. Arguing that the proposal stinks is one thing; arguing that it stinks because I (or my ilk) would be personally inconvenienced by being asked to chip in too is another. Smells like: selfishness.

    (Not that that, of course, won’t happen: “The proposal likely will face opposition from physicians, hospitals, health insurers, employers and labor groups [Wall Street Journal, 1/13.]” Sounds like a winning combination. http://www.californiahealthline.org/index.cfm?Action=dspItem&itemID=129421

    On another note: I’m astonished to read that The New Guy pays 40-50% of his income in taxes. The average total tax burden of a US citizen in 2006 is 31.6%, according to the Tax Foundation (http://www.taxfoundation.org/news/show/335.html). That includes 10.6% in state and local taxes. It’s an average, true, so some pay more and some less. But the more you earn, the lower your total tax burden actually is in general (obviously, since sales taxes, for example, eat up so little a proportion, comparatively, of your big income.) So is The New Guy overestimating a bit?

  11. Well, I had a beautiful long retort that unfortunately contained too many links (I neglected to read the terms and conditions in the fine print at the top of the comment box, just as so many people do in their health insurance binders) and thus it got junked. Here’s one of those links, for a concise description of the Schwarzenegger proposal: gov.ca.gov/index.php?/press-release/5057/. And see especially these sentences:

    “To reduce the ‘hidden tax’ associated with low Medi-Cal reimbursement and to encourage greater provider participation in the Medi-Cal program… Medi-Cal rates [will be increased] for providers, hospitals and health plans…. Increased Medi-Cal rates and eliminating the uninsured will direct $10-$15 billion in new money to hospitals and doctors. Therefore, a coverage dividend of 2% on doctors and 4% on hospitals will be assessed to help cover the increased Medi-Cal rates. Employers of 10 or more (small businesses, which make up 80% of California business, are exempt) who do not provide coverage will pay an ‘in-lieu fee’ of 4% of payroll. Without this fee, the system will see ‘crowd-out,’ a system creating an incentive for employers to drop coverage.” Etc.

    Incidentally, I am not a proponent of this plan, in part because it strikes me as the Health Insurers Guaranteed Prosperity Act of 2007, and in part because I can’t see how mandating that everyone buy health insurance will work any better than requiring that every driver buy auto insurance. How’s that one working out again?

    Nor are doctors the only ones who think their ox is being unfairly gored. “The proposal likely will face opposition from physicians, hospitals, health insurers, employers and labor groups,” according to the Wall Street Journal (1/13). Sounds like a winning formula.

    Finally, I was astonished to read that The New Guy pays 40-50% of his income in taxes. According to the Tax Foundation (you’ll have to link for yourself) the average total individual tax burden in the US in 2006 is 31.6%, of which 10.6% represents state and local taxes. True, it’s an average, and some pay more, some less. But as incomes go up, the tax burden as a percentage goes down (obviously, since sales taxes, for example, eat up a lot less of one’s bigger income.) I have to wonder if The New Guy isn’t overestimating.

  12. Oops. Sorry. Guess the first one didn’t get junked after all.

  13. With regard to taxes, the website you link doesn’t take into account local, property, or sales tax, nor does it take into account that I’m an Independent Contractor, and thus liable for my own payroll taxes (hidden from most employees). My IC status also means NO benefits (you may or may not include $$ spent on health insurance as a “hidden tax”, as Ahhnold does) and I have to take care of my own retirement planning. My tax rate may not be a full-on 50%, but it’s certainly more than 30%.

    I appreciate the follow-on post; much more informative and much more your usual style. I’ve read some of your previous writings, and some of them are quite good (I particularly liked the one on disruptive physicians). More to the point, I did read some of the info you linked, and was reminded of why I scrutinize politicians. They don’t even have the guts to call that 2% tax on doctors a tax. They instead describe “a coverage dividend of 2% on doctors.” A coverage dividend? That’s a nice touch…

    Incidently, I’m not complaining about my income; it’s more than I’ve ever made in my life, and more than most people will make. My point was that I’m aware of how much effort, both financial and professional, I’m already putting into taking care of the poor, the uninsured, the homeless, etc, so it rankles a bit to have an additional tax (wait… my bad… it’s a dividend) piled on. Hence, I cast a jaundiced eye on any politician who implies, however obliquely, that ER docs aren’t already carrying their share of the load.