The Agenda

Today’s Policy Agenda: Should Tax Dollars Go to Training Doctors?

Should tax dollars go to training doctors?

At the Upshot, prominent health-care academic Uwe E. Reinhardt argues that, as an economic matter, new doctors shouldn’t be trained at the expense of taxpayers. The rational for publicly funded medical degrees is that medical training, or individuals with medical training rather, are a public good — an economic concept referring to something everyone can use, without impeding on others’ ability to use it.

But as Reinhardt points out, since medical professionals decide if, when, and where they work, they aren’t equally accessible to everyone:

Medical education and training represents human capital that is fully owned by the trainees. They can deploy it as they wish — on patient care, or even in the financial markets, where quite a few physicians now work. In principle, therefore, the owners of that valuable, purely private human capital should pay themselves for its production.

But according to the American Association of Medical Colleges, the U.S. is already facing a serious doctor shortage that will only get worse:

Even taking the industry’s claims with a few grains of salt, the constrained supply of doctors does suggest that their training needs some form of public support. 

Millions will see their Obamacare subsidies reduced automatically. 

The Associated Press reports that millions of Americans who received subsidies to buy health insurance will receive a smaller amount than they planned on. Since subsidies are linked to income, if individuals make more money in 2014 than they anticipated, their subsidy will be automatically reduced. Subsidies are given as tax credits, so some individuals’ tax refunds will be less than they planned on, but for others, they may end up with an actual tax liability. “More than a third of tax credit recipients will owe some money back, and (that) can lead to some pretty hefty repayment liabilities,” one tax expert told the AP. 

Most affected individuals don’t know they will be receiving less at tax return time. There is a process to report unexpected income and to avoid owing extra at the end of the year, but few consumers have used it because it’s complicated and requires month-to-month income accounting. 

American corporations actually do pay their fair share.

In Forbes, Yevgeniy Feyman argues that, contrary to what President Obama has implied, inversion, when a company moves its headquarters to another country because of differences in tax systems, is not unpatriotic – it just makes sense:

“Restructuring to reduce tax burdens is no more than unpatriotic than corporations incorporating in Delaware to take advantage of the simple incorporation process. More importantly, the idea that companies aren’tt ’paying their fair share’ – at least relative to companies in other countries – is equally disingenuous,” he writes.

The U.S.’s high corporate tax rate and attempts to tax global income of U.S.-based firms, unlike most countries, means that more and more companies are making the move abroad:

Feyman concludes that U.S. companies’ efforts to relocate, a process that is both expensive and difficult, is an indication that something is very wrong with the American taxation system, not the firms themselves.   

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