A study published April 25 in Health Affairs suggests taxing as a tool for policymakers to address high healthcare prices.
The study said that while traditional price caps provide an incentive for providers to cut costs, there is a danger that if prices are set too low, the quality of healthcare services could decline or cause safety-net providers to close.
Instead, the study proposes that policymakers consider a tax on the part of the price that exceeds a certain threshold.
"For example, lawmakers could apply a tax of 2 percent on prices between 155 percent and 170 percent of the rate that Medicare charges for the same service and a tax of 5 percent on prices between 170 percent and 185 percent of the Medicare rate, and so on," the study said.
Revenue generated from these taxes could be used to support other health-related policies, such as increasing subsidies for those who purchase insurance on exchanges, or increasing prices paid by state Medicaid programs.
The study said the provider rate taxes should be equally applied to both nonprofit and for-profit healthcare providers. Both can charge excessive prices in the commercial market, and a tax applied to all providers improves the competitive position of any entity able to offer lower-cost quality care, the study said.
The study was conducted by Katherine Gudiksen, Darien Shanske, and Jaime King. Ms. Gudiksen and Ms. King receive funding from U.C. Hastings College of the Law; Arnold Ventures; the Robert Wood Johnson Foundation and the Commonwealth Fund. Ms. Gudiksen also has funding from the National Academy of State Health Policy. Ms. King also receives funding from the University of Auckland. Mr. Shanske receives funding from the University of California, Davis School of Law.
Read the full study here.