Blog , Health and Wellness

Doctor Tax Credits for Treating the Poor Spells Budget Relief for Iowa Taxpayers

Posted on Monday, October 7, 2019
by AMAC, Bob Carlstrom

doctor tax credit poor spells budget relief Iowa taxpayersThis article first appeared in the Des Moines Register.

While lawmakers in Des Moines can take justifiable pride in running a tight fiscal ship, managing the state’s $5 billion Medicaid program is a growing challenge.

With Medicaid rolls projected to swell this year and beyond, the best cost containment measures cannot long forestall fresh budget infusions.

Fortunately, a bipartisan bill called the “Physician Pro Bono Care Act” (H.R. 856) is gaining traction in Congress. It incentivizes doctors to administer free care to those eligible for Medicaid and CHIP. Iowa Rep. Steve King is supporting the legislation as a co-sponsor.

Currently, federal tax law allows physicians to deduct only pro-bono services they render to a 501(c)(3) charitable services institution. This bill would correct that defect by allowing them to deduct medical services provided in clinics and offices to low-income individuals who don’t have insurance and who are eligible for Medicaid and CHIP.

Doctors’ pro-bono services would translate into a significantly larger payout if the same service was performed by the same physician and the billing was handled through Medicaid services. For example, $6.6 billion could be saved a year in national Medicaid disbursements for emergency room visits alone, according to an estimate by the Association of Mature American Citizens. That figure is based on a scenario in which the 7 million Medicaid patients who visited an emergency room once in 2016 at the average Medicaid payout cost of $1,100 would have instead received pro-bono treatment from a doctor at the cost of a deduction of roughly $50.

While the measure is not a cure-all for the hundreds of billions of Medicaid dollars spent each year, it provides states like Iowa with a pressure relief valve against the need to boost Medicaid spending.

In addition, the bill encourages lower-income people to form traditional patient-doctor relationships that can promote better health outcomes. That connection can be critical in seeking preventative care before conditions become acute. Without access to a primary care physician, many patients put off seeking medical help until their situation necessitates an emergency room visit, which can be 20 times as expensive as physicians’ office visits.

At a time when some doctors are no longer accepting Medicaid patients because of the complex and time-consuming requirements of the program, the Physician Pro Bono Care Act offers doctors a less complicated option to treat lower-income patients.  Although they’d receive a lower tax deduction than what Medicaid billing would pay, shredding bureaucratic red tape provides enormous value.

This bill would help ensure that our most vulnerable Americans have access to the care they need, from the doctor they choose. Iowans deserve strong bipartisan support from their congressional delegation around this commonsense legislation and Rep. King should be commended for throwing his support behind it.

Bob Carlstrom is the chief of staff of the 2 million-member Association of Mature American Citizens (AMAC), which supports this legislation.

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4 years ago

This could substantially lower the provider’s state tax requirement. They are being reimbursed with a state tax deduction for a service rendered. And since the amount for the state deduction will have to be reported to gain the reduction It will be documented and accessible to the IRS. That declared amount would be revenue that they would need to declare on their federal taxes as earnings. It’s not exactly a win/win.
As we get into this medicare free for all we’re going to find out that free is expensive to some body and that some body is going to be me and you.

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