Institute of Medicine: Tax Medical Care to Pay for New Public Health Programs

The Institute of Medicine (IOM), a federal advisory organization that has provided the Obama administration with considerable medical “cover” for decision-making regarding ObamaCare, has issued a new report which promotes a new tax on medical care to pay for improvements to public health services in the country.

The report, entitled “For the Public’s Health: Investing in a Healthier Future,” reprimands the United States for what the IOM views as lavish spending on clinical care but minimal expense on preventive strategies. According to the IOM, this misguided approach to health care has led the United States to “poor performance in life expectancy and other major health outcomes” as well as a “growing toll on the economy and society.”

To remedy this problem, the IOM recommends that the government make a list of public health services that can be accessed by everyone, including anti-smoking and vaccination programs, chronic disease and mental health screenings, etc. In assessing how to finance all these programs, the report’s authors considered several funding options, including new taxes on sugary drinks, estates, and life insurance payments.

They eventually settled, however, on a medical care tax on health care services and health insurance because this levy would be a “broad-based tax to benefit a common good.” The tax could be charged on doctor’s visits and prescription drugs, and would be applicable for health care consumers with both private insurance coverage and Medicare. The authors state that about $50 billion could be collected with a 2% transaction surcharge.

The medical care tax would be an additional surcharge to those levied already in the new health care law, i.e., the taxes to insurers and medical device manufacturers to fund health insurance expansion to the uninsured.

In its report, the IOM provides a positive view of the Affordable Care Act, aka ObamaCare, which, in many ways, it helped to shape:

The passage of the Affordable Care Act may create opportunities for public health departments to focus more intensively on delivering population-based services because the law will trigger a concerted effort to shift clinical care out of health departments. Accordingly, the committee recommends that public health departments work with other public and private providers to develop adequate alternative capacity in a community’s clinical care delivery system.

The Wall St. Journal reports that, in response to the IOM recommendations, Kathleen Sebelius, secretary of HHS, said that it is “about time that we as a country got serious about prevention.”

However, the report drew criticism from various circles. Sen. Orrin Hatch (R-Utah), of the Senate Finance Committee, said the IOM’s recommendation of a new tax on medical care was “an absurd and misguided proposal from an organization that is becoming increasingly irrelevant.”

Similarly, Jeff Levi of the Trust for America’s Health group, an advocacy group for greater public health funding, acknowledged, “In the current climate, are we going to see another tax? Probably not.” He added that the IOM report was “a way of trying to highlight the relationship between public-health systems and medical spending.”

Finally, Dr. Ken Thorpe, a health policy professor, said he believes the IOM recommendation will receive significant opposition from health care providers who are already financially overwhelmed by the ObamaCare legislation.

Though Sen. Hatch described the IOM as “an organization that is becoming increasingly irrelevant,” we might actually consider whether, like the all-too-common czars and directives by executive fiat, within the Obama administration, the IOM is more dangerous than irrelevant. The amount of influence that this board has been allowed under Kathleen Sebelius is at once both remarkable and frightening.


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